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10 Money Mistakes You Must Avoid At All Costs | How To Be Good With Your Money - YouTube
Channel: Betterment Boss
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Money is a very delicate issue for many
many people this issue can be so
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contentious that instead of managing
their money people will avoid the topic
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altogether and solely focus on earning
and spending it in short there are two
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types people those who increase their
wealth and those who lose it and in this
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video I will share with you ten money
mistakes you must avoid at all costs and
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if you're new to the channel then hit
the subscribe button below for more
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life-changing content the truth is that
keeping money is a lot harder than
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making it it's not uncommon to see
people who come into wealth through
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inheritance lottery or other windfalls
and lose it in a short amount of time a
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good example of someone who earn a
ridiculous amount of money but lost it
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all is the famous boxer Mike Tyson
despite earning over 300 million dollars
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in his career in 2003 he declared
bankruptcy and was reported to be in
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more than twenty million dollars worth
of debt needless to say that money
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mistakes happen and these mistakes can
cripple your finances no matter how much
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money you make so let's get into the 10
mistakes that you must avoid number 1
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spending on drugs or cigarettes doing a
drug or two in college may have been fun
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and seemed harmless in the moment but
the truth is that constant use can have
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negative effects on both your health and
your wallet if you calculate how much
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drug and cigarette users spend in a week
or a year you'll see that many of them
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are hamstringing their ability to reach
financial freedom for example a pack of
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cigarettes cost nine dollars and eight
cents and many cigarettes smokers smoke
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a pack a day this amounts to 63 56 a
week or three thousand three hundred and
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five dollars and twelve cents a year the
same amount of money could cover the
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property taxes on your home or a two
week vacation but sadly many drug and
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cigarette users fall into this habit
through curiosity and peer pressure
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the end result of this habit is a hefty
toll on both your health and your wealth
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in the long term as such try to avoid
spending on these items as best you can
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number two spending more than you make
this can be tempting to do especially as
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a young adult it can be tempting to blow
your money right out of college when you
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are making a consistent income for the
first time in your life buying that new
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car moving into a new house and flying
first class
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they're all appealing things to do but
the problem with them is that you tend
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to end up living paycheck-to-paycheck if
your income can't cover these costs this
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issue can be like into lifestyle
inflation whereby an increase in earning
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will cause you to increase your living
expenses an increase in paycheck
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shouldn't warn you to increase your cost
of living however the majority of people
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feel that they should reward themselves
once they get paid instead this cash
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inflow should be directed into
prolonging your wealth through
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investments and the acquiring of assets
probably the biggest reason that people
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spend beyond their means is to impress
others they spend because their
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self-esteem is low and without these
material goods they feel inadequate in
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comparison to others but this is flawed
thinking as Dave Ramsey says we buy
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things we don't need with money we don't
have to impress people we don't like
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many of us are guilty of this once you
learn to delay gratification and forget
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about impressing people you will then be
able to grow financially social media is
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another cause of overspending people try
to spend huge sums of money trying to
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look rich without actually being rich an
internet entrepreneur for example who
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after being told he would never make a
big business might buy an expensive car
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when he makes his first big sale in
order to prove his critics wrong again
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falling into the trap of trying to
impress others this means of impressing
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others is a never-ending staircase at
all points of life there will be others
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to compete with or to show off - you
have no business buying a gadget worth
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$2,000 when your monthly salary is just
$3,000 be smart create a budget and
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track your spending to ensure you avoid
spending more than you make number 3
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not investing wisely investments can be
really tricky and many people put their
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money into things based on tips from
friends or a strong conviction that the
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prices of popular stocks will keep going
up one type of asset to just about
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everyone seems keen on these days is
real estate many people think that once
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they own an investment property that
they'll be financially set they think
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that every month rent payments will just
start rolling in and their income will
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exponentially increase unfortunately
this is not always the case sometimes
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tenants missed payments appliances break
or the value of your property declines
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like all types of investments there is
risk involved for the wise investor
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the key to making their assets produce a
reliable stream of income is to obtain
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the proper knowledge about a particular
market or product before putting their
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hard-earned money into this adventure in
short make sure to do proper background
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work on whatever it is you want to get
into and not just because your friends
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are making money from it or a sales
agent told you about the great benefits
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it has to offer
number four following get-rich-quick
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schemes get rich quick schemes are one
of the surest ways of losing your money
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as the saying goes quick money brings
quick problems and following a money
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scheme is bound to get you in trouble
get rich quick schemes include things
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like Ponzi schemes pyramid schemes and
make money overnight offers and are all
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set up to make the scheme originator
rich by taking your hard-earned money if
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you are looking into new business
ventures and see opportunities that
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promise high returns with small risk
then tread with caution think of it like
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this if it takes 20 years in a career to
make $200,000 and a new venture is
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saying that you can make that amount of
money in a year benefit was legitimate
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wouldn't everyone be doing it in short
when it comes to making money fast
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always employ your best judgment before
signing on the dotted line number 5 not
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having an emergency fund let's face it
life doesn't always go your way and
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sometimes you need cash in order to
rectify the situation you're in for
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instance your car could suddenly stop
working you could lose your job or your
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washer could break unfortunately just
about everything in life costs money
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which is why not having an emergency
fund set aside is a critical money
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mistake sadly a 20-19 Federal Reserve
study found that almost 40% of American
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adults wouldn't be able to cover a $400
emergency with cash savings or a credit
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card charge that they could pay off
quickly about 27 percent of those
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surveyed would need to borrow the money
or sell something to come up with the
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$400 and an additional 12% wouldn't be
able to cover it at all luckily you
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don't have to be one of these people
saving these funds can be easy all you
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have to do is set up a 10 percent
automatic deduction from your pay with
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your employer that will send a portion
of your paycheck into an emergency
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savings account but how do you know when
you've saved enough most financial gurus
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recommend you accumulate 6 months worth
of living expenses but if you want to be
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extra cautious than one year's worth is
a great gold
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number six having just one source of
income for most people having a sole
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source of income as a way of life and
this income usually comes in the form of
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a salary unfortunately jobs aren't as
secure as people perceive them to be
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in fact in 2018 alone US businesses laid
off more than 21 million people meaning
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that if your job was the only way you
made money then all of a sudden your
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cash inflow came to a halt when it comes
to income sources you need to think of
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yourself as a tree do trees grow fruit
only from one branch the simple answer
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is no they have different branches
producing flowers and fruits and so
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should you
you should keep developing and learning
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new ways to let your income work for you
this is not only wise but a safe way to
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help you sleep at night
number seven relying heavily on credit
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cards for many people credit cards can
be a convenient tool for making
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purchases but for others they can be a
one-way ticket to dead although you need
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credit cards for some business
applications relying on them heavily can
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ruin you financially the use of credit
cards promotes impulse buying
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it gives you the mentality that you can
afford anything and everything all with
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an easy swipe in fact a 2001 MIT study
found that sharper spent up to a hundred
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percent more when using their credit
card to pay instead of cash so if you
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find yourself uncontrollably spending on
credit form the habit of paying with
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cash instead when you pay by cash you
are physically handing over money and
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seeing the depletion in your wallet will
make you feel the financial impact of
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the purchase much more than when you pay
on credit number eight being scared to
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take financial risks as the saying goes
no risk no reward and in order to make
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money you need to take risks
however the risks you take need to be
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calculated for instance putting your
money in an index fund is higher risk
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than leaving your money in a savings
account but your money will never grow
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making the typical point zero nine
percent interest at a savings account
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yields instead investing in an index
fund for example which mirrors the
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movements of the whole stock market has
historically provided returns of 7%
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annually which is a calculated risk that
in my opinion is worth taking
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number nine saving rather than investing
when you keep money in the bank it loses
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value over time due to inflation however
when money is invested wise
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it grows it's that simple in mistake
number nine I mentioned that being
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scared to take financial risks is a
mistake the people who are scared to
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take risks are people who will save all
their money and leave it to a road
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overtime the only money you should be
leaving in a savings account is money
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for your living expenses and your cash
emergency fund in short you have to save
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to invest and not save for the sake of
saving money saved without any actual
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plan will end up being spent on things
that are not worthwhile for instance
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when you leave money in your bank you
will become tempted to spend it on
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material goods like a new car
new clothes or entertainment instead you
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should be getting that money to work for
you by investing it whether that's in
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the form of stocks real estate wreaths
or startups all these avenues offer a
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way to make new streams of income which
is much more financially lucrative than
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letting your money devalue when sitting
in the bank
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number 10 having only one bank account
having only one bank account is risky
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for a few reasons first having one bank
account will make the management of your
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money really difficult by working with
just one bank account you have to keep
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all of your emergency bill and college
savings in one spot then if you splurge
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in Spanish cash you may risk not having
emergency cash or tuition money readily
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available when you need it this is why
you should have at least three bank
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accounts one should be used for
emergency funds in case anything goes
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wrong another account can be for your
day-to-day bills and a final account
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which I call a play account your play
account is what money you allocate for
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entertainment or vacation and if you
want to take things one step further you
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should set up an untouchable account
this account can be used as a savings
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account that paycheck deductions are
directed to every single month so you
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can automate your savings process and
ensure your wealth grows over time
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thanks for watching if you want to go
from the life you have to the life you
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deserve then hit the subscribe button
now
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you
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