The 13 Laws of Money

okay so today I'm going to share some rules of money that are incredibly important to understand and potentially to adhere to so we're gonna just jump into this right now we don't want to beat around the bush but if you're new here to the channel and you want to learn more about these topics then make sure you're subscribed to the channel and you drop a like on the video and let's just get started here so the first thing that we need to understand is that money is simply just a tool and I hear so many people from time to time saying that money is inherently evil it's something that you should never think about or consider and I think this is kind of the wrong idea now while money and and finances can certainly skew people's morals and and and corrupt certain people if something that's simply just a tool it can be used for good and for bad and so the point here is that let's just take for example let's say that you wanted to fix a a homeless problem in say your local city right and so one stance could be well you could go and donate 30 hours a week at the local homeless shelter now that can be very very effective and obviously everybody appreciates that very much or if you had money what if you built a hundred homeless shelters so you see kind of the point there that that that it's not necessarily that money's evil there's there's certainly things you can do with it that can be very beneficial to society to others so kind of having the mindset that you should never think about it so that you should never desire having any money I think it's sort of a flawed way to think about just so just understand that it's a tool that can be used for good or for bad now the next one here is to think about taxes now for some reason whenever we make a video about taxes on this channel while I'm not an accountant I'm not enough a financial advisor sometimes we discuss ways to save money with taxes and people tend to just not really care about it they don't click on the videos they don't watch the videos and we talk about taxes but people are leaving so much money on the table by simply not filing for their tax returns for 2020 we're coming up on taxis in here people don't like thinking about it but I see so many people leave money on the table because they don't understand how it works they don't understand how they're taxed how they can get rebates how they can get money back from the government that they've already paid and how they can just save money all around the board so understand your income tax just take a day and start to just do some simple google searches about Pennsylvania income tax california income tax wherever you live and learn about how your tax look at the FICA taxes maybe I just love accounting and I love talking about this but generally it's something that you want to just be very aware of what are your property taxes are there ways to lower those types of taxes and trust me there's always sort of loopholes you can get around with to end up saving more money on taxes and who wouldn't want to do that it's pretty logical you'd want to probably save some money on taxes and I'm telling you if you're not doing that you're gonna want to look into it so always be very aware of how your tax and the next point here is that you're not taking money to the grave with you you know while we talk about financial independence quite a bit on this channel and we discuss how to create financial freedom it's also very essential to realize that well at least from my perspective that once I'm dead my money's not gonna be any use to me maybe my family maybe my children if I have some children in the future but for the most part I want to make sure that I'm using my money then that's squirreling it away forever so there's sort of a line to be drawn somewhere and I certainly have a line drawn for myself of saving money and making sure that you're building a good financial future for yourself but also enjoying some of the money or some of the assets that you have so if you're a multi-millionaire and you're still living in you know a $400 a month apartment and you're not paying for health insurance and your car is always breaking down and you you have to take the bus all the time and you're being kind of cheap about it well you know once you die you die and and and your money's not gonna be any of use to you so I think there is sort of a level there where it's okay to spend some money if you already have that nice financial net going for yourself alright so the next rule is to build some type of buffer now look I've said this before but every time that any of my friends from college or anybody around me says Nate what do I do what's the first step to just creating some peace of mind with finances with money it simply just create a buffer so if you are living paycheck to paycheck and it doesn't matter I can make it a hundred thousand dollars a year or ten thousand dollars a year just having a buffer of a thousand dollars of two three four or five thousand dollars whatever you can afford and build it up and it's sort of this emergency fund it's gonna give you such peace of mind if you lose your job if something happens if suddenly you you have to pay for a two thousand dollar random expense that pops up out of nowhere you can cover it and it's just going to give you it's going to alleviate someone's pressure I've seen it from time to time from so many people and as I said I'm not a financial adviser but this is just something that I think everybody needs to have is an emergency fund or some type of buffer that you can then start worrying about paying off your debt you can then start worrying about all these other things in life but just having that buffer incredibly important so the next role here that you really want to consider is what we're gonna call the law of capital see we can kind of tie this back into economics a little bit but there's really two types of capital there's there is a physical capital and there's human capital so we could think about how we invest right and so maybe you could buy real estate you could have gold you could have cash in your hands that would be physical capital but then there's also something called human capital and this is something that I think everybody is should really just be aware of and that is by thinking about investing into yourself so for example if you wanted to build your human capital you could read books you could go to college you could spend a hundred thousand dollars on a college education is it worth it maybe maybe not statistically it still is worth it to go to college in most cases or you could just find ways to increase your knowledge right and it's hard to put a price on that and that's why I actually reached out to audible to see if they wanted to sponsor this video and they said yes so you can certainly sing with a thirty-day audible trial absolutely free you get one free audiobook and then you get to audible originals absolutely free for a 30-day trial so I will leave a link down below it's gonna be audible.com slash NATO Brian that's audible.com slash NATO Brian or just text NATO Brian - 500 - 500 that's NATO Brian - 500 - 500 but they have a number of different selections on there that you can listen to I love to do this when I'm just on a train somewhere I'm on a plane I'm going for a run somewhere and it's nice to just be able to listen to a book and continuously build my human capital it's a wonderful investment from my perspective and then right now I'm listening to the alchemist which I'm not sure how I haven't gotten to this one yet it's a 20/20 and I'm finally getting to this audio book but like I said I will leave a link down below and you guys know I very rarely do any sponsors on this channel I only work with companies that I truly find very valuable and ones that I actually use myself so let's move on with this video let's talk about the next sort of rule of money or law of money that I think is very essential and that is understanding that there are different types of debt that can be good or bad there's good debt and there's bad debt now this is kind of an area where a lot of people go wrong where maybe they just assume that all debt is absolutely terrible and they should stay away from it now some people might want to do that especially if you've had a lot of problems paying off bills paying off debt in the past but it's okay to understand that look there are types of debt that people can actually use for leverage they can make money off of those types of debt for example real estate no this goes wrong in some cases look at when people are buying houses in 2005-2006 when you even 2007 at peak prices and then they came crashing down it didn't really work out when people were really leveraging their money and maybe they had no job no income and they were getting a three hundred thousand dollar mortgage that did happen about 12 years ago or 13 years ago now but there are good types of debt and there are bad types of debt so generally speaking the way that I think of this for myself is the the banned types of debt or anything that is a high interest not secured credit not secured debt so things like credit card debt where it might be paying 25 percent annual interest rates things like personal loans things that are generally higher interest rates and then there's something that we can consider sort of good types of debt or at least from my perspective ones that I'm willing to go into debt for so for example something to increase my knowledge something to increase my education like student loans could be considered a good type of debt because it's essentially an investment see when you're using a credit card to buy a bigger TV that's not an investment or at least hopefully that's not an investment but if you are taking out twenty thousand dollars so that you can get your master's degree so that you can make more money that would be seen as a fairly good type of debt it doesn't always work out of course sometimes people take out quarter-million dollars in student loans and then they end up working at 7/11 because they went for a degree that just has no money in it and they couldn't get a job they failed out of college there's a lot of cases like that but that's a good type of debt there's also ones like if you get into real estate investing and you want to buy a million-dollar apartment complex you want to buy a four unit six units four apartments and you don't have a million dollars on hand well you can consider taking out a loan a mortgage from the bank and kind of leveraging your money in some cases but as I said big claimer sometimes things go wrong but there's a lot of real estate YouTube channels out there that I think are really interesting somebody like meet kevin has some great videos on that so you can always check that out if you're interested in leveraging your money and using good types of debt to make more money but credit card debt personal loans any type of high interest debt that's not an investment I would probably stay away from if I were you all right so this next one is one of my favorites it's called lifestyle inflation and this is why people who win the lottery go broke this is why a lot of professional athletes go broke even though they make millions of dollars they have something called lifestyle inflation so I remember back when I was in school there were a couple of kids whose parents would pick them up in really nice cars sometimes they were Escalades or some Porsches and and and and so you would always just assume that these people must be really wealthy they must be rich but once I got older I realized that most of those parents they were poor because they maybe were making a hundred and fifty thousand dollars per year but they were spending two hundred thousand dollars per year they were spending more than they were making and so this is why a lot of people who think that money will fix their issues of if they're poor now and they have no money now that if they just make more money it's going to fix their problems for a lot of cases that's not true and it's not true because they don't have the basic understanding of finances and a great financial groundwork in order to actually start to save to start to build wealth to start to invest and so just remember lifestyle inflation that if you're making a thousand dollars a month now and you scale it up to ten thousand dollars a month but when you're making ten thousand dollars a month you you go out and you buy a really nice car you go out and you get an inexpensive penthouse apartment that's lifestyle inflation as I've been scaling my income over the past couple of years quite drastically my expenses have stayed somewhat the same I've increased them ever so slightly but not at the rate of which they would be the next one that I kinda wanna bring up here is that money generally follows attention so this is something I did with this channel you don't have to do the same thing but generally speaking understanding this idea that money follows attention is going to help you make a lot more in the future so just by thinking about it that that you don't always want to go just for the money right away for example for this channel I started this almost three years ago now and I really didn't make any on this channel for the first year then the second year I made a little bit then the third year it's been starting to roll in a lot faster but I did that because I didn't want to focus on the money but realize that if I could get more attention if I can get more views in my videos if I could put out more videos that generally the money will follow later later down the road this is why anybody who's famous like think about your favorite musician and think about your favorite athletes your favorite comedians they make a lot of money because then they can just hold off like a Pepsi and they can get two million dollars for just cracking a Pepsi on TV for doing almost nothing that's why audible spots in this video because now my videos get some views on them so if you just remember the idea that money follows attention it doesn't have to be your personal brand it can be anything that that can get you attention it can be your own brand that has no face attached to it a website anything whatsoever now it's also essential to understand your loans it absolutely baffles me how many friends I have who will get a new car and they will have the color dealer show them that they might owe $400 a month or they'll say you're gonna owe $350 a month but they never ask what's the actual interest rate on this what's the interest that I'm paying an annual rate and so understand your loans very well if you're getting a mortgage don't just look at the monthly payment look at the interest rate and then understand what's the average how can you get a better interest rate in most cases that's going to be improving your credit getting a higher credit score it's going to help you in so many other areas of your life we have videos on that and I had a fix bad credit on how to build your credit as high as possible to get you better loans overall but just understanding everything related to loans your student loans what are your interest rates on that are you going to tackle the highest interest rate first are you gonna do the debt avalanche or the debt snowball approach for paying off your debt there's so many things you want to think about related to that then you want to just take a whole day and sit down and look at all your loans look at all your debt and figure out what's your strategy what's your game plan for paying off all of this debt as soon as possible and it's effectively as possible okay the next one is one of my favorites here and it's known as the 24 hour rule so I like to do this quite often but anything that I'm gonna be buying that is a big-ticket item I make sure that I sit on it for 24 hours I have to think about it for 24 hours before I actually this saves me a lot of money so for example if I all of a sudden say I want to go to the Super Bowl next week and I'm super excited and I'm about to buy this ticket I just had this idea five minutes ago and I'm gonna buy the ticket really spontaneous that's not always a great option it's great to sleep on it think about it for 24 hours and then if you're still excited about it then go buy that Super Bowl ticket or then go spend that ease or burn an amount of money on something that you're thinking about doing but you're sleeping on it man if it saves me a lot of money it saves me a lot of money when I go out to a store and I see something really nice and I think wow I really want this but it's you know $400 just sleep on it next day you come back you realize you know I don't actually really want that that much there was I don't know what was going on with me at the moment so that's one that you want to think about now the next one is by thinking of the rule of 72 this is a great little rule of thumb that you can use that I use quite often when just calculating investments so the rule of 72 essentially how this works is very simple but it shows you how fast or how long it's going to take you to double your money with your investment assuming that you know the rate of return or the interest rate now without getting too technical here essentially what you can do is let's say that you expect to make 10% per year from your investments how long would this take to double your money well you take 72 divided by 10 because that's your interest rate 10% so 72 divided by 10 and that would give you seven point two years it's going to take to double your money at a 10 percent rate you can mess around these numbers you can see if you had one percent interest it would take you a very long time taking 72 years if you had 100 percent interest it would take you not even a year to double your money so you can see how that works right and it's one of my favorite little tools you can use and there's a number of different sort of ratios and numbers and formulas that you can use to find out you know how much money you would have in the future with your investments you can just look up some things like Bank Rate they have some great calculators on there so there's two more in this video and one of them is to just not buy something that rust rot or depreciates it's a simple idea that I have whenever I go out and I'm thinking about buying something now you don't have to stick to this religiously but generally speaking if I'm at the store and I'm looking at something I'm saying well I have $400 burning a hole in my pocket I want to buy something for some reason and I'm looking at something I'm thinking does this item that I'm about to buy does it rust does it rot or it doesn't depreciate where next year it's gonna be worth nothing and so that's why for example buying a Rolex I don't have a Rolexes is not nearly as expensive as a Rolex but buying a Rolex it's not the worst thing to buy because it generally holds US value over a long period of time it's debatable but there's some things that if you buy them and you enjoy them they might hold their value over the long period of time whereas a car for example don't get me started on cars but they rust rot and appreciate very very quickly they are incredibly incredibly just devaluing every single year so obviously you might need a car but the point here is to just think about the purchases that you're making and just say what is the value of this item if it's a box of cereal what's the value of this item you're going to be in five years and if it's cereal it's gonna be zero dollars well you obviously need some food but if you're buying something else and you're buying some furniture what's a value that's gonna be in five years and just sort of think about these things if you can maybe put some money into things that gain value over time then it could be worth your time to look into and the final one here that we're gonna wrap it up with and you know I think I've ended some other videos like this as well so maybe you've heard of it but it is very just something that I take very seriously and that's just to understand that money does not make you happy and if you're at a moment in your life right now when you're not happy you're depressed something's wrong understanding that money is not going to be the the sole solution to fixing those problems and that's something that I realized a very long time ago that as I said going back to the first point it's just a tool it's a tool that you can use for good or for bad but it's not going to fix all of your problems and I don't want that to sound depressing but it's just something that you want to realize that if you're not happy making more money might not be the number one solution and there's gonna be other things it could certainly help it can certainly help pay your water bill and help you from getting evicted from your apartment thanks for watching the video I'm excited for next week's video if you guys haven't subscribed yet make sure you do so drop a like leave a comment down below and I'll see everybody next week [Music]

Channel: Nate O'Brien

Views: 123,739

Rating: 4.9559836 out of 5

Keywords: law of attraction, how to make money, rules of money, laws of money, nate o'brien, money, investing, personal finance, laws of money and wealth

Id: hfJDb23ejeM

Length: 17min 36sec (1056 seconds)

Published: Tue Jan 28 2020