The 5 Basic MONEY SKILLS You Need To KNOW!

if you want to become wealthy there are some basic money skills that you have to know and in this video i'm going to be going over five money skills that you need to know what's up everybody i am desperate sing from the minoritymindset.com where money minds rethink rich i think a lot of people don't grow up talking about money in their households and if you do grow up talking about money it's usually in a negative context like you're talking about money problems and why money is so hard to get and why you can't afford your bills but if you really want to become wealthy you have to understand money and the first way that you can understand money is by talking about money my parents are immigrants from a state in india called punjab and in our culture money isn't something that you talk about very openly it's just one of those things that you go to work to earn and then you just assume that money is gonna be okay even though you don't really talk about it like i remember when i would talk about okay how am i gonna take care of myself financially my parents would always tell me well if you become a doctor you won't have to worry about money and everything will be fine all you gotta do is go become a doctor earn a big salary and save a chunk of your money and everything is going to be fine financially and that was the extent of my financial education for the first 17 years of my life my parents are the hardest working people that i have ever met i mean they had to literally bust their back to earn a living to help support me and my brother and to raise us in a new country but they never really understood financial education i mean this was all they knew and so they thought that if you wanted to become wealthy all you had to do was get educated earn a big salary and save some of your money like most people they didn't grow up with financial education and that's probably one of the reasons why i'm so passionate about the minority mindset message to help spread this financial education because this is something that so many people need i mean we all need this but most of us are never taught how to use our money the right way now when it comes to you becoming wealthy there are five money skills that you need to know and these are the five things that i'm going to be talking about in this video but before i get into that i need you to do me a quick favor and smash that thumbs up button below and a quick word from our sponsor policy genius if you are interested in getting a free life insurance quote policy genius can do that for you and the reason why i like policy genius is because they stand by what they do if you can go out and find a cheaper life insurance quote anywhere else policy genius will pay you 100 for wasting your time so if you want to learn more if you need life insurance and you want to see how much life insurance would cost you i got the link to how you can do that with our sponsor policy genius in the description below the first basic money skill you need is you need to know how to live below your means this was pretty much the only money skill that i grew up learning because in the indian culture the tradition in indian culture the whole idea is you make a dollar to spend 20 cents you can compare that to the american culture where you make a dollar to spend two dollars no i know this is a generalization but this is reality at the same time lots of indian people are cheap lots of american people are in debt i'm not saying that you shouldn't pay people what they deserve i'm saying that you should be cheap in a smart way by keeping more of your money for yourself instead of spending all of your money i used to guest teach in detroit public schools and one of the first things that i learned by teaching here is that so many kids did not have the basic understanding that you need to live below your means because what a lot of people thought was okay i go to work and if i make a hundred dollars that means i can go out and i can afford a hundred dollar pair of shoes because i got a hundred dollars in my bank account but there's something deeply wrong with that philosophy because what you need to understand is there's the difference between being able to buy something and being able to afford something just because you can buy something whether you have just the cash in your bank account or whether you can go into debt to buy something is different than actually being able to afford it if you only have a hundred dollars to your name you cannot go out and afford a hundred dollar pair of shoes yeah you can buy it but you cannot afford it there's a difference between being able to buy something and being able to afford something the easiest way to remember what you can afford is just by following a rule of five which says that if you cannot buy five of them you cannot afford one of them so if we're talking about things that are not essential for you to live then you got to follow a rule of five that we can understand that you need to live below your means because when you're living below your means that means you got some extra cash at the end of every single month that you can put to work to make you more money if you're spending every dollar that you earn on clothes and shoes and cars and vacations you will never have a chance to become wealthy because anytime your money comes in it goes directly out and it never stays there to build wealth for you that's why you got to understand number two how to allocate your money if you don't have a plan or a system on how to use your money you're never gonna know how to spend your money when you get it like if you went to work today and your boss gave you an extra ten thousand dollar raise today how would you spend the money would you save all ten thousand dollars would you invest all ten thousand dollars would you go on a big vacation and blow all ten thousand dollars what would you do with that money and if you don't have a system in place you're not going to know what to do with money when you get it that's why you need to know how to allocate your money before you even earn it you need to create a system almost like a funnel which tells your money where to go that way anytime you earn a dollar your dollar is going to flow through this funnel and some of this money is going to be spent some of this money is going to be invested and some of this money is going to be saved one of the simplest ways to do that is by following a plan like a 75 15 10 plan which says that for every dollar that you earned 75 cents is the maximum that you're allowed to spend and then 15 cents is the minimum that you will invest and 10 cents is the minimum that you will be saving so this is spending this is investing and this is saving so now any time you make a dollar it is going to flow through the system so you're creating a plan for your money before you even earn it and anytime you make money it's going to flow through here there's three-handed funnel and some every money is going to be spent some of your is going to be invested and summer money is going to be saved now what you can do is once you understand how much money you want to save because you don't want to just save your money forever you're going to take this extra savings money and you're going to put it here towards your investments the reason why you don't want to save all of your money is because saving is losing as you've heard we heard through the news that the value or dollar is dropping you're seeing more inflation this is causing the price of groceries to go up this is causing the price of things to go up this is causing your housing costs to go up and so the price of things keep going up while the value of a dollar keeps going down that's why you don't want to save every dollar that you can because these savings that you're saving are just losing value now you want to have some savings to protect you from an emergency because if your car breaks down or if your ac stops working or if your window breaks you want to have some cash that you can fall back on that way you don't have to go into credit card debt to fix these emergencies so you want to have somewhere between 3 to 12 months worth of expenses saved in your savings account that way if something bad happens you have cash to fall back on so if you're okay taking on risk then you might only need three months worth of expenses saved but if you want to be really conservative and you want to have that extra cushion then you can have 12 months worth of expenses saved in your savings account you got to find the right balance for you once you hit your savings target then you want to stop saving extra money because this emergency money is only going to be saved and used for emergencies this is not money that you can use to go out and buy a home there's not money that you can use to go out and buy a big screen tv when it goes on sale this is the money that you're only going to save for emergencies after you finish that savings goal that's when you can start allocating your savings money towards your investments because this is the money that is going to make you wealthy the savings money is going to protect you from an emergency this is going to make you wealthy and this spending money is what allows you to have fun with your money the reason why i like this percentage model is because as you make more money you're going to save more money you're going to invest more money and you have some more money to spend too because you don't want to just live a life where you feel like you're always holding yourself back and you're never able to have the nice things that you want and that you work so hard for you should be able to have the nice things when you can afford them but that means you also got to be investing more money and you also got to be saving more money but as you make more money the system will also let you spend more money so as you have more money as you make more money as you have more investment money well now you can afford the nice things you can go on the nicer vacations you can have the nicer clothes you can have the nicer car you just want to make sure you can afford it first and the thing that helps you understand if you can afford it or not is if you're paying yourself first because this is what's going to make you wealthy when you do this you are paying yourself first when you do this you're protecting yourself first when you do this you're making everybody else rich now that's not necessarily a bad thing i mean everybody wants to have a nice car everybody wants to have nice clothes everybody wants to go on vacations right it's not bad to pay other people but when you do that you just want to make sure that you're paying yourself first and this is where you got to know how to allocate your money because when you're allocating your money this way where you always have money going towards your investments and you always have money going towards your savings in a way where you're saving your money the smart way and you always have money going towards your spending but not all of it now you're allocating your money in a way that's building you wealth first now this brings me to number three because once you're allocating your money the right way you need to know how to grow your money because what's going to happen is you're going to have some savings growing you're going to have a bank account with your savings money and you're going to build a savings cushion you're going to know how to spend your money because when you have money to spend you're going to go to the store and spend it but your investment money is going to be sitting there and you want to know how to grow this investment money because if this is the money that is making you wealthy you got to know how to actually grow this money so you can have that wealth so let's talk about how you can invest this money so you can build wealth when you start putting money aside to invest you're going to want to know how to grow this money the most efficient way possible that way you can get the biggest returns and there's a couple of different ways that you can grow your money on a very high level there's an active way and there's a passive way an active way is now when you're taking your money and you're putting it to work with your physical self so you might be using yourself or your time or your labor to grow your money and here it's just you're putting your money to work passively and you're letting your money grow itself so a couple examples of active investing would be one starting a business another is now investing in your education so this could mean buying books buying courses you're investing in your knowledge that way you have more knowledge to grow your money or do more things to build more wealth and this could be things like starting a side hustle or if you want to go into a little bit more depth you also have things like stock trading and you have things like house flipping so now you're going out and you're buying a home you're renovating it and you're trying to sell it here you're trying to find the hot stocks you're buying them and you're trying to sell them for a quick profit all these things require active time on your part in order to make money because if you're not actively trying to flip houses you're not going to be making money if you're not actively trading stocks you're not making money if you're not putting work into your side hustle or your business you're not making money at least in the beginning parts and if you're not putting time and money into your education whether it's through reading books or getting courses or getting consultants or coaches you're not going to do anything with it because now you have to put in the time and the work and the money to get this education then you got to do something with it for any of these active investments to work you have to invest your own time for the purposes of this video i'm going to focus here on the passive investment side of things and a couple of the most common passive investments are stocks and then real estate you also have cryptocurrency becoming very popular as a passive investment but i'm going to focus on stocks and real estate because these things have many decades of historical data and so we can talk about this from a passive investment strategy that we've seen work over time the whole idea with this type of passive investing is you are going to work every single day to get paid and now when you get paid you want to take some of your money and you want to invest it and this investment is going to happen on its own that way you can spend your time working to get this paycheck and now your money is also working to make you more money so anytime you get paid you're going to put your money into the funnel and now some of this money is going to be automatically invested to make you more money a couple places where you can invest that are stocks in real estate so when you invest in the stock market you are buying ownership in companies and so now you're putting your money into this company and you're telling the amazon company or the apple company or the tesla company or the snapchat company or the facebook company or the lululemon company you're putting your money into these companies and now you're letting the executives and the people at these companies work to grow the company and make the company more money and when the company makes more money so do you because then the stock price will go up or they will pay you a dividend just for investing in the company so if you invest in the right company and the company makes more money you will make more money too now as a little disclaimer there is a lot more to what determines the stock price than just how much money a company is making but for just the general terms for what you need to understand for this video is that as a company makes more money more people are going to want to own it and that's going to push the stock price up which will make you more money so stocks are a way for you to invest in companies and let the companies make you more money and anytime you get paid you can just throw your money into the stock market and let these companies hopefully make you more money with real estate the whole idea is now instead of investing in individual companies you can go out and buy properties like let's say we're talking about single-family homes and now instead of you going and living in this property you can have somebody else live in your property and pay you rent so if you buy a home you can have someone else live there and they might be paying you 1500 a month every single month just for living in your home now you can be out vacationing on a beach in hawaii and your tenants are still paying you 1500 a month every single month because they have to pay to live in your property now the difference between real estate investing and stock market investing is that in order for you to go out and buy a physical property this can take a lot more cash than it does to go and invest in the stock market like you can start investing in the stock market with as little as a hundred dollars with real estate you're going to need way more cash to go out and buy a property with the stock market it can be much more passive because once you invest your money in the company you don't really got to do anything if we're talking about investing in real estate you're going to have to meet contractors and real estate agents and attorneys and accountants and so you're going to have to work with a lot of different people and property managers and get this property leased out so there is more work it can be completely passive once you understand the business but to get over the hurdle it's gonna take a lot of work so there's different kind of business models with real estate investing in stock market investing and you have to find what's right for you here you're getting more cash flow you're buying anytime you buy a property you're buying like little streams of income here with the stock market many times you're trying to get this future appreciation yeah you can buy cash flow in the stock market with dividends as well but when most people are investing in the stock market they're looking for stock price appreciation they're looking to invest their money today and they want to see the price of their stock grow the key for either of these to work for you as a passive long-term investor is you have to invest your money for the long term and you have to just keep constantly putting money into your investments that way you have more money to grow and so that's why anytime you get paid you want to put more money into your investment account and whether this money is sitting there waiting to be invested or actually invested you want to make sure you keep compounding investments so your money keeps growing and you keep adding more money into the fire that we have more money to grow now if you are interested in learning more about money management and investing our team put together an amazing money management pdf that walks you through some of the things that you need to know this pdf is completely free for you to download when you sign up for a free daily newsletter and i got the link to get a free pdf in the description below now that you know how to live below your means and you know how to allocate your money the right way and you know how to grow your money by constantly investing your money into the right investments it's time for you to know how to spend your money the right way we already talked about the difference between being able to buy something and being able to afford something but it goes a little bit deeper than that because even if you can afford something many times you might not know how to buy something the right way if you want to understand this you got to start by understanding how the system works because a business's job is to sell you something and a bank's job is to lend you money and so if a business is not selling you something and a bank is not letting your money they are not making money so they are very incentivized to sell you things and to sell you money and so this is where you got to understand what you're doing what you're buying and how you're buying it that way you're buying things the right way a couple things that are becoming extremely popular now are buy now pay later or as we like to call it broke now broke later and zero percent apr financing both of these kind of act the same way essentially you can go out and buy this two thousand dollar tv today but you don't have to spend all two thousand dollars today you can just pay it off in installments over the next twelve months and if you do that you don't gotta worry about paying any interest on this two thousand dollar tv now at first glance that seems like a no-brainer because now instead of you spend all two thousand dollars today you only gotta spend a couple hundred dollars today and now you can take the extra eighteen hundred dollars and invest it and let your money grow and now you can just pay this money off over the year what's the big deal well let me just put it this way there's no reason why zero percent epr is so profitable for banks when you start jumping into the zero percent apr and the buy now pay later hoops you don't realize the pain of actually spending money because yeah you bought this two thousand dollar tv but you didn't have two thousand dollars actually leave your bank account you only had a couple hundred dollars of your bank account and yeah if you paid off over the year you're only going to pay two thousand dollars and you'll have to pay any extra interest but what happens is people don't feel the pain of two thousand dollars leaving so what did you do so now you're gonna go to the store now you're gonna buy some nice furniture because you have more money you can buy nicer furniture and you can just do buy now pay later or zero percent apr on that and now you can go out and buy a nice computer zero percent apr buy now pay later and so now you have the ability to spend more money because you still have more money in your pocket today now you're playing the payments game where yeah you're paying zero percent apr but you're spending way more money than you would have if you just had all that money leave your account today everybody says yeah i'll just finance this tv over 12 months pay zero percent epr and invest the difference but nobody ends up investing that money because everybody ends up spending that money so now businesses make more money because now you have more money to spend today and what ends up happening for a lot of people is because you spend so much money you're not gonna have the ability to pay it off in time and now you're gonna get slapped with huge apr fees after this zero percent apr trial ends and now banks make a killing too i don't want you to play that payments game i want you to be smart with your money buy the things that you can afford with cash that we don't got to worry about financing debt can be okay if it's making you money but your big screen tv isn't making you money once you get to here and you know how to spend your money the right way you're really gonna be on your path to building the wealth and developing the wealth and this is where you got to make sure that you five know how to protect your money and your wealth here's the reality whether you like it or hate it when people realize that you have money they're gonna try to take their hands put it in your pockets and take some of this money for themselves that's why you want to make sure that you have proper shields put up to protect you to protect your finances to protect your wealth and to take care of your family because if you can't take care of yourself you can't take care of your loved ones or your community one of the first things that you want to do when it comes to wealth management is have an estate plan in place if you were to die what is going to happen with your money and your assets how is it going to be distributed if you don't have a will or a trust or any of this estate planning in place then the state is going to come in the government's come in and they're going to tell the world how your money should be spent you do not want the government deciding how to spend your money so please go and talk to an attorney or just do some basic estate planning that way you have a plan for your assets after you pass the next thing is you want to make sure that you have insurance set up the right way and insurance is not something that anybody likes paying but it is a necessary cost because it's a small price to pay today to protect you against a huge headache in the future these are things like home insurance and car insurance and health insurance and life insurance home insurance car insurance and health insurance are pretty self-explanatory and everybody knows why they need them life insurance isn't always so self-explanatory the whole idea behind life insurance is you are buying insurance against tragedies because if you were to unexpectedly pass and you are a breadwinner for your family and your family lost your income stream you want to make sure that your family will still be okay without your income and life insurance is what allows you to do that because life insurance the way it works is you buy this policy and if you were to die during the life insurance period then the life insurance company would come in and they would give your family a big check that way at least your family will be okay financially the thing that always breaks my heart when i see it is when you see this tragedy happen somebody dies unexpectedly and then the family has to go up and they have to start a gofundme page to raise money to cover funeral costs to raise money to pay their bills and to raise money just to be able to live their lives like normal it is so hard enough to lose somebody that you love and then to have to go and raise money in order to just keep living your life i mean it's very difficult so if you want to avoid at least the financial part of the tragedy because tragedies are unpredictable the way you can do that is through life insurance the good news about life insurance is it doesn't have to cost you a lot of money like if you are a healthy third-year-old guy you can get a million dollar life insurance policy for less than a dollar a day now i'm not going to go too deep into life insurance in this video but our sponsor policy genius can help you get a free life insurance quote and again like i said earlier the reason why i like policy genius is because they stand by what they do and if you can go out and find a cheaper life insurance quote anywhere else they will pay you a hundred dollars for wasting your time so if you want to learn more see why life insurance is important see if it's good for you and see how much life insurance would cost you for free i got the link to how you can do that with a sponsored policy genius in the description below now once you have the keys to actually building wealth because now you know how to live below your means you know how to allocate your money you know how to grow your money you know how to spend your money and you know how to protect your money and build your wealth now it's all about doing it if you enjoyed this video here's the video on how to start generating passive income that i think you'll love and while you edit download our free money management pdf and as always keep hustling after i read the book i heard about this thing called real estate investing and i got really excited because it looked kind of like this so let's say you wanted to buy this property and it costs a hundred thousand dollars

Channel: Minority Mindset

Views: 49,521

Keywords: minoritymindset, minority mindset, minority123, jaspreet singh, rethink rich, financial education, financial literacy, money skills, build wealth, become wealthy, how to build wealth, how to become wealthy, passive income, investing, investing 101, how to invest, investing in stocks, investing in real estate, stock market investing, real estate investing, money management, personal finance, financial literacy 101, financial literacy for beginners

Id: HOrwIBHnRlI

Length: 21min 38sec (1298 seconds)

Published: Wed Jun 16 2021