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Financial Education | The 4 Rules Of Being Financially Literate - YouTube
Channel: Practical Wisdom - Interesting Ideas
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Financial education is the possession of the
set of skills and knowledge that allows an
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individual to make informed and effective
decisions with all of their financial resources.
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It is also called âfinancial literacyâ
and itâs extremely important in order for
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you to make progress and get ahead in life.
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If youâre looking for improvement in your
personal and financial life, you might be
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looking for financial freedom and financial
independence.
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It means that you want to reach a point in
your life where you no longer have to depend
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on family, a job, or a company that you donât
like, for money.
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But there is another concept that Iâd like
you to understand, it is âfinancial confidenceâ.
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It is different from financial freedom.
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This is because freedom is based on the amount
of money that you have available, while financial
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confidence is based on your confidence and
acumen to generate money.
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Now hereâs the thing: most people think
that there is a money scarcity.
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They think that there is no money and making
more money is impossible.
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But this is deeply untrue.
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The truth is, the world is littered with money,
but only those with the skills and knowledge
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can acquire it.
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Money is like a game, and it has a bunch of
rules that you just have to follow.
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Play according to the rules and you will become
the master of your financial life, guaranteed.
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In this video, Iâm going to teach you the
4 most important rules of money which are
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the basics of being financially free, financially
confident, and financially literate.
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These simple rules that I will give you today
will elevate your money game and take you
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to a whole other level, youâve never seen
before, as long as youâre hungry and dedicated.
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Iâm going to give you all this information
for free, I donât sell books, webinars,
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or online courses.
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All the knowledge on this channel is FREE,
so if you want to show your appreciation,
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click that like button and the subscribe button
right now.
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It is actually very fascinating how all this
information is becoming more and more available
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every day, for very cheap or even for free.
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And everything is easily accessible with a
couple of Google searches.
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So, even if everything is at their fingertips,
more than 90% of the population is still financially
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ignorant.
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Letâs me give you a quick example, Peter
just got his monthly paycheck.
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After tax, heâs left with $1700.
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Instead of using this money to invest, save,
or anything else that might be useful, he
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decides to waste it on a couple of barbecues
with friends and many other useless liabilities.
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Are you a Peter?
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Because there are unfortunately a lot of financially
ignorant people today, but the thing is, if
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they can change a few bad habits and develop
a rich mindset, just about anyone can become
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rich.
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There are no rich people that are financially
ignorant, except of course, for those that
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got lucky, for example, stumbling upon a large
inheritance or winning the lottery.
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However, statistics show that 70 percent of
lottery winners end up bankrupt after just
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a few years of being extremely rich?
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Why is that?
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Again, it all comes down to how financially
educated one is.
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If you have a lot of money, you will still
make bad decisions and lose it all, because
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you donât know what to do with it.
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So, if you want to become rich long term,
and not just for a couple of years, you have
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to get financially educated.
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Unfortunately, this kind of education is NOT
taught in schools, so you need to do it by
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yourself.
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So, all the information is easily accessible,
and this raises the question: why donât
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people learn more about finance?
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There are two main reasons why people donât
get the financial education they need despite
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it being extremely cheap and, in some cases,
completely and totally free.
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Reason number 1: Conventional Wisdom
Hereâs the truth: financial education is
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NOT conventionally ok.
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Most people will give you a mindset of scarcity,
and if your mindset is wrong, you will never
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attract money.
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For example, growing up, your parents might
have been telling you âmoney doesnât grow
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on treesâ, and, âmoney is the root of
all evilâ.
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These lies that people tell their kids are
stopping people from taking the necessary
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steps to a better life financially.
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Another conventional concept that is widely
thought but is extremely wrong is the negative
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connotation towards debt.
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Debt is not that bad (if you know how to use
it), but still, people demonize it because
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they donât have the appropriate education.
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So, you have to stop listening to those that
arenât financially literate and financially
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confident.
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You should start listening to those that actually
know how to generate money because they are
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the ones that can give you tips on how to
become financially educated.
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Just like in a sport, for example, Skiing,
You donât want to learn how to ski from
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someone that has never skied before, you want
to learn from somebody that already knows
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how to do it.
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Apply this to your financial education, and
youâll learn very fast.
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Reason Number 2: Comfort Zone & Self-Esteem
In order to generate money, itâs believed
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among the rich that, you need to be confident
and have decent self-esteem.
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Self-image is important, and you have to first
of all, believe that you truly deserve to
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be wealthier and happier.
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If you donât, you will never become rich.
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Think of like a self-fulfilling prophesy,
you have to see yourself rich first.
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This confident, charismatic, rich image, you
see yourself in your mind will give you the
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needed confidence to continuously act out
of your comfort zone, which is very important.
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A very successful person once said: âmost
people are not successful because they are
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afraid of successâ.
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This is true.
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In order to become successful, you have to
step out of your comfort zone and take risks.
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For example, if you want to start your first
business, but you donât have any money,
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you might first of all have to take the risk
of getting a loan from your bank, and putting
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yourself in thousands of dollars in debt which
is out of a lot of peoples comfort zone.
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Charisma and confidence are some of the key
ingredients you need to become rich.
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If you donât have the confidence to take
action, youâll never become rich.
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So, before actually getting into financial
education, you have to first work on yourself
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and your mind when it comes to risk-taking
and failure.
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Confidence will give you the strength and
the courage to take risks and perform under
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pressure.
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So, now that you know all about why people
donât get financially educated, and the
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importance of it, letâs get started with
the 4 most important rules of being financially
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educated.
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Rule Number 1: Donât Invest In What You
Donât Understand
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Investing is very important especially when
you want to multiply your money.
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Hereâs the thing: you will never, ever,
get rich long-term by working for someone
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else.
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You have to start investing.
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There are many types of investments, such
as stocks, bonds, real estate, and forex,
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just to mention a few, but I want you to know
the single most important investment; and
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thatâs in yourself.
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Invest In Yourself
Before investing in anything else you have
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to invest in the development of your money-making
machine: your brain.
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Getting the knowledge necessary to operate
a business (financial education included)
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is not optional.
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Your industry and your niche are going to
eat you alive unless you are always updated
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on whatâs going on.
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Stay up to date on all information that matters
to you and to your success.
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Invest In Your Business
If you buy or create a business, you will
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probably at one point want to expand it.
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If you want to do so, you need to put some
money into your business in order for it to
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grow.
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Itâs like a car: in order to make it run,
you have to put gas in it.
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And a business is no different, in order to
keep growing, it needs to be fed money.
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Investing in your business might be anything
from marketing to research or developing a
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new product.
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Invest In Real Estate
Real estate investing, like other investments,
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are basically âbuy low and sell highâ.
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A simple concept with very complicated steps.
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Most real estate investors start with regular
homes, then they move to commercial real estate,
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hotels, big commercial centers, offices, and
more.
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Basically, you find units (structures) with
potential that have been mistreated, you fix
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them up, you wait for the price to rise and
then you sell that unit in order to make a
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profit.
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Invest In Stocks
Stocks (or shares) are literally a part of
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a company that is for sale to the public.
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When buying stocks, you have the right to
a part of the profits of that business, which
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is the equivalent of your initial investment.
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Just like any other investment, the stock
market is pretty risky, and there are a lot
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of people that lose a lot of money with it.
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So, these 4 are the most important and well-known
types of investments.
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However, independently of the type of investment
that you choose, you have to know what youâre
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getting into.
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There are rules to follow but equally thereâs
a lot of misleading information out there.
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A lot people are willing to scam you just
to take your money.
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So you have to be very - very careful who
you listen to, do heavy research before putting
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your money in something new, or seek advice
from a professional in that industry, preferably
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someone with skin in the game.
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Remember this rule: NEVER invest in something
that you do not understand.
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Rule Number 2: Debt Is A Powerful But Deadly
Weapon
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This one might be controversial, but the power
of debt is underrated.
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All those that know how to use it will thrive,
while those that are scared of it will miss
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a lot of opportunities.
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There is good and bad debt.
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Bad debt is anything that you know that you
wonât be able to pay off, for example, student
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loans.
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This is extremely painful and it destroys
the financial life of many people.
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We shouldnât ask 18-year-olds to make financial
decisions of hundreds or thousands of dollars,
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without considering the consequences, so be
careful with that one and only get in debt
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if you know what youâre doing.
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On the other hand, good debt is the type of
debt that youâre absolutely sure youâll
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pay off (or you have a plan to pay it off),
and it will also make you money.
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Getting in debt is a tool that you can use
to get rich.
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For example, you might want to get a loan
in order to start your business.
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If it all goes as planned, you will pay off
your debt and will be free to expand your
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business as long as youâre always paying
off your dues.
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Rule Number 3: Think Rich
Thinking rich is seeing yourself rich and
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acting rich.
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Essentially youâre playing the of a rich
person, and this might include living above
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your means.
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Living below your means is a defensive concept
invented by financial gurus that to the most
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part is solid wisdom, I mean we shouldnât
live way beyond what we can afford, because
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this is how most people end up in serious
financial trouble.
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As long as you are disciplined and wise about
what youâre doing with your money, you have
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to also spend your money on things that give
you confidence, and make you feel good.
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Do you really think that depriving yourself
of a couple of coffees at Starbucks will make
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you a millionaire?
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Instead of living below your means and saving
a penny here and a penny there, start gaining
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new skills that will make you money in order
to support your desired lifestyle.
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This single trick will have a HUGE impact
on your mindset, youâll start seeing opportunities
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and places where you can make money.
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Rule Number 4: Develop Skills To Acquire Assets
Assets are things that put money in your pocket,
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while liabilities are things that take money
out of your pocket.
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Your brain is your biggest asset, and you
can develop it in order to be even more valuable.
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There are skills that are very demanded in
the marketplace, and they all have two things
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in common:
1.
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They bring a lot of value to the market.
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2.
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They make you a lot of money.
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So, instead of working for someone else, start
developing skills that will help you generate
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income from nothing, just by delivering results
to the market.
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Figure out what best fits your abilities,
and develop your first high-income skills
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in order to gain the resources necessary to
acquire more and more assets.
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Well, thatâs it for todayâs video, I hope
you enjoyed it and gained value from it, if
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you did give it a big thumbs up.
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Also, Leave your thoughts down below, Iâd
love to hear them.
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With that said, donât forget to subscribe
and enable notifications.
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Thanks for watching and Iâll see you in
the next one.
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