🔍
10 Personal Finance Rules School Doesn't Teach You - YouTube
Channel: Practical Wisdom - Interesting Ideas
[5]
Top Ten Personal Finance Rules You Won’t
Learn in School
[9]
What did you learn about personal finance
in college?
[12]
Credit?
[13]
Investing?
[14]
Money Management?
[15]
Or did you only take the courses that were
mandatory for you to graduate?
[18]
Well, for most people these classes were more
or less pointless, just like calculus, astronomy
[24]
and anthropology.
[25]
The longer I’ve been out of college, the
more disappointed I am about how much information
[29]
was not included throughout my studies.
[32]
The world tells us to go get educated, get
a job and all will be well.
[36]
But, unfortunately, it’s not that simple!
[38]
For you to succeed in the world you need to
know a lot more about money than what school
[42]
will ever give you.
[43]
Personal Finance forms the backbone for all
success stories.
[48]
To save you from the hustle and bustle of
having to learn from your mistakes, our team
[51]
of experts have compiled a list of ten most
important rules that everyone should abide
[56]
by to be ahead of the game with their finances.
[59]
Grab a pen and paper, here are ten of the
most important personal finance rules you
[63]
will never learn in school.
[65]
Before we start, why don’t you hit the subscribe
button?
[68]
And the bell notification icon so you never
miss any of our videos.
[71]
Let’s begin.
[73]
10) Buying Your First Home
You have probably heard of the popular statement,
[77]
‘If you want to buy a home you have to save
up to 20% of the value for down payment.’
[81]
If you don’t you will be forced to pay private
mortgage insurance, which could really dent
[85]
your account.
[87]
What you won’t learn in school is that while
higher mortgage payments may be painful, the
[91]
financial trade-off between paying more money
now and waiting to save up the 20% deposit
[95]
could be worthwhile.
[97]
When we look at macroeconomic factors in the
US over the past decade, the appreciation
[101]
rate of real estate has really gone up but
the wage levels have remained stagnant.
[105]
So it makes it unrealistic to start saving
up 20% of the home value as it will only increase
[110]
drastically over the years.
[112]
The rule behind this is; if you have the capacity
to save the money within at least five years
[117]
comfortably, then go for it.
[118]
But, if it will take you longer, you’ll
be chasing a moving target as the prices increase.
[123]
9) Save Save Save
[125]
In school, they will teach you to save at
least 10% of your income.
[128]
But, let’s be honest here, this isn’t
enough to retire on.
[131]
Well, unless you are earning millions.
[133]
For most of us with a regular paycheck, a
decent savings percentage will be about 25
[138]
- 40%.
[139]
We’re not saying 10% is entirely useless,
it could be a great starting pint to build
[143]
that savings muscle.
[144]
In order to save more, reduce your expenses
and unnecessary costs.
[149]
Instead of buying that cup of coffee every
morning, put that money in a savings account
[152]
with a better interest rate.
[154]
08) Emergency Fund
You may have never heard of an emergency fund
[158]
from school.
[159]
But, you’re lucky you have us to teach you
about it.
[161]
Recent statistics show that up to 40% of Americans
don’t have the funds to cover an emergency
[166]
of $400.
[167]
This is an alarming statistic that only shows
how people disregard the importance of an
[171]
emergency fund.
[173]
What if you lost your job today?
[174]
Would you have enough money to cover your
costs?
[177]
The golden rule is to have six months of expenses
costs saved up somewhere, but, we suggest
[181]
that if you can make it more, the better.
[183]
07) Budgeting Basics
[186]
Budgeting is quite important in life, yet
you won’t hear anything about it in school.
[189]
Sadly, not understanding the basics of budgeting
while in school can leave you disadvantaged
[193]
right after graduating, especially once you
move out.
[197]
Not having knowledge of how to manage bills,
and create the distinction between wants and
[200]
needs can lead to one enduring one hardship
after the other.
[204]
Everyone needs to know how to plan a lifestyle
that is financed by earned income.
[209]
This includes understanding how to plan for
all bills but still ensuring there’s enough
[212]
left for necessities such as groceries and
savings.
[215]
But, let’s face it as much as budgeting
is important, no one really likes tracking
[219]
every single penny they use.
[221]
What you can do instead is what we refer to
as tactical budgeting.
[225]
This involves creating budgets and plans over
a long period of time.
[228]
For example, you can identify what you need
every month and create a budget with the needs,
[233]
wants and respective costs over the next six
months.
[236]
From the plan created you can then separate
the amounts into different accounts to ensure
[239]
you don’t spend beyond your budget.
[242]
Then occasionally you can refer to your list
to stay on track.
[246]
06)Compound-Interest
The power of compound interest is possibly
[250]
the best-kept secret.
[251]
The one thing every young people have as an
advantage over everyone else is time.
[256]
While they may not achieve their financial
goals instantly, they have an upper hand when
[259]
it comes to investing.
[261]
All they need to do is tap into the powers
of compound interest.
[264]
By setting aside small chunks of money in
a high-interest account, young people can
[268]
amass great wealth that will compound over
and over again through the years.
[271]
To show you just how important compound interest
is here’s a great example.
[276]
If someone gave you two options the first
choice a three thousand dollars and the second
[280]
a penny that doubles up in value every other
day.
[283]
Most people would choose the first choice,
right?
[285]
You probably did too...
[287]
But if you do the math, the second choice
would be worth $10 million after 30 days only!
[292]
If that’s not enough to convince you to
start taking advantage of this incredible
[296]
opportunity to grow your wealth, then I don’t
know what will.
[299]
05) Secrets of Credit
Most young people right after getting their
[303]
first credit cards, end up maxing them out.
[305]
They then end up with a life full of debt,
where they are forced to pay up huge chunks
[308]
of interest rates, and in some cases, this
results in late payments that could adversely
[312]
affect them.
[313]
What most people don’t know is the importance
of credit scores and maintaining a great credit
[318]
history.
[319]
But they would probably be aware of the secrets
in schools paid more attention to training
[322]
them on this life skill.
[324]
Here’s what you need to know; Your credit
score is one of the most important parts of
[327]
your financial health, and it generally determines
your financial position as an adult.
[332]
With a proper score, it’s a lot easier to
purchase a house, get a car, get a business
[336]
loan and makes it much easier to achieve other
milestones in the future.
[340]
We can no longer ignore the importance of
credit.
[343]
Everyone needs to know how to build credit
and have a proper score all the time.
[346]
Here are a few pointers on how to achieve
this.
[349]
One, get a credit card.
[351]
Most people think getting a credit card is
a mistake but it is actually quite important
[354]
in building your credit score.
[356]
Let me give you a good example, so I have
a friend called Kevin, just like some people
[360]
he avoided getting a credit card for most
of his young years after graduating from school.
[365]
Doesn’t sound like a big problem, right?
[367]
But when he started looking for a home to
buy and a car, he couldn’t get any loan
[370]
approved because his credit statement hadn’t
been established.
[373]
Here’s how it works, when you get a credit
card and use it, financial institutions record
[378]
all your transactions and interest payments.
[381]
Based on your efficiency, they will assign
a score to your name.
[384]
Now when you go looking for a loan, that score
will determine the loan amount you can receive
[388]
and the interest rate.
[389]
Two, always pay your debt in time.
[391]
There’s no other way around this if money
is due today make sure you pay it today!
[396]
04) Rules of Insurance
If there’s anyone who is depending on you
[400]
financially then you need to get life insurance.
[402]
This could be your child, spouse or parent.
[405]
It is better to get a term policy rather than
a life one as you get coverage whenever the
[408]
need arises.
[409]
However, if no one depends on you financially
end the policy to save on money.
[414]
In addition to life insurance, get insurance
for other aspects and assets you own.
[418]
This includes your car, home, expensive assets,
and health.
[422]
You can also get umbrella insurance which
covers different policies and guarantees a
[426]
discount if obtained from one insurer.
[428]
Take your time to get different rates and
the features available before choosing a company
[432]
to insure with.
[434]
03) Taxes
Taxes are such a broad topic that is hardly
[438]
ever discussed in school.
[439]
It is important to understand how they work
if you want to be on the right side of the
[442]
law.
[443]
Before you get your first paycheck or make
any sales from your business, learn how to
[446]
calculate the tax rate and find out how much
money you will be left with.
[450]
This will help you to determine whether a
job offer will meet your financial needs and
[453]
what the appropriate pricing strategy for
your products or services will be.
[456]
Luckily, there are plenty of online calculators
that will do the dirty work for you.
[461]
They will show you the gross pay, the amount
payable in tax and the amount left in your
[465]
account, also known as the take-home pay.
[467]
For example a salary of $35,000 a year in
Manhattan, Newyork will leave you with about
[472]
$26,399 after tax deductions.
[476]
Also pay attention to the marginal tax rate
that affects your raise.
[480]
For example a raise of $35,000 to $41,000
a year won’t give you an extra $500 a month
[486]
but $345.
[489]
Make a habit of preparing your tax returns
yourself, there is a lot of misinformation
[492]
and bad advice out there.
[494]
Be careful!
[495]
02) Guard Your Health
A hospital visit for an injury like a fractured
[499]
knee can cost thousands of dollars without
insurance.
[502]
If you’re finding it hard to meet your monthly
health premiums then what will happen if you
[505]
end up in the emergency room?
[506]
You may end up having to borrow money to pay
for your medical bills burdening other people
[510]
who had plans with their money.
[512]
Doesn’t sound fair right?
[514]
If you don’t have a medical cover get one
ASAP!
[516]
Also, taking care of your health can end up
saving you a lot of money.
[520]
This involves eating the right foods, maintaining
a healthy weight, regularly exercising, not
[525]
consuming alcohol and other addictive’s
excessively.
[528]
You don’t want to be sorry, so guard your
health today!
[531]
01) College Debt isn’t 100% Necessary
[534]
Contrary to what everyone believes that student
loans go hand in hand with a college degree,
[539]
you actually don’t need to get one to achieve
the latter.
[541]
85% of new graduates complain of the heavy
school debts and the chunk of money that goes
[545]
to paying it off immediately they start working.
[547]
It’s not always a must you get these loans
to pursue your degree.
[552]
Some institutions like the Davidson College
in Charlotte help students so they don’t
[555]
end up in debts.
[557]
Other schools offer great education at a fraction
of the private schools tuition fee.
[561]
You could also attend school part time, work
as you study, enroll in a more affordable
[565]
school, graduate fast, or begin your journey
in a community college.
[569]
But, we’re not saying debt-free schooling
should be everyone’s goal.
[572]
In some cases it might be worth it.
[574]
If you’re set to launch in a very high-paying
career path, then a few thousands of dollars
[578]
shouldn’t get in the way.
[579]
However, don’t establish this debt as the
main factor of existing as a college student.
[583]
There are so many other ways of achieving
your career goals.
[586]
That’s it for today, we hoped you learnt
a few tips.
[588]
If you are still here then I bet you enjoyed
the video, give it a thumbs up and don’t
[593]
forget to subscribe if you haven’t already.
[595]
We have regular finance videos that will help
you grow abundantly so stay tuned!
[599]
With that said, I will see you in the next
one.
Most Recent Videos:
You can go back to the homepage right here: Homepage