part 1 money habits

The video discusses seven money habits that keep people poor. The first habit is not paying yourself first and not saving at least 20% of your income. The second habit is living beyond your means and not being able to afford things. The third habit is lacking financial education and not learning about personal finance and investing. The fourth habit is not having an emergency fund and proper insurance to protect against unexpected expenses. The video emphasizes the importance of changing these habits to improve financial stability and build wealth. Hey guys, welcome, hey guys, welcome back to the channel. Hey guys, welcome back to the channel. My name is Kimothy and on this channel we speak everything personal finance and when I say everything personal finance, I mean everything personal finance. In today's video, we're going to be talking about, in today's video, I'm going to be telling you, in today's video, I'm going to be giving you seven signs that, no, seven money habits. In today's video, I'm going to be talking about seven money habits that's keeping you poor. These money habits are completely, and these money habits are completely, and these money habits are avoidable. They're just going to have to be learned like any other habit. It has to be practiced so you can create a good habit like anything else. To get out of these habits, you're going to have to change your lifestyle. You're going to have to practice. You're going to have to work to get better and get out of these habits that are making you poor. I'm telling you, these habits are no good and you can break out of them. I'm going to give you some ways that you can do it. I'm going to give you some examples of what you're missing by falling for these bad, by practicing these bad money habits. By breaking these habits, you will be on the way to transforming your financial future and that's the ultimate purpose of this channel. I want you to break free and become a financial competent, a financially empowered person. I'm going to be giving you some tips and tricks on how to do that. The first habit that's keeping you poor is you're not paying yourself first. Your bills are getting paid first. Your mortgage is getting paid first. You're paying all these other people first. Your credit cards are getting paid first. Everyone's getting paid first but not you. You're getting paid last. You're getting what's left. You're getting the scraps. What we want to do is pay ourselves first. What do I mean by that? What do I mean by paying yourself first? I'm talking saving 20% of your income. I've done videos on how much you should be saving a check. I've done videos on how much of your paycheck you should be saving. We came to the conclusion that based on the 50-30-20 rule that we should be saving at least 20% of our paycheck and that is going to be the case for this money habit. You need to be saving at least 20% of your paycheck and this money needs to go to you before it goes anywhere else. The best way for that to happen and for the best way for it to get to you first is by automating your savings, allotting money straight from your paycheck to your savings account, a separate savings account outside of your main bank, outside of your checking, preferably in a high-yield savings account. If you can't get in a high-yield savings account for whatever reason, just get it into a savings account and tuck it away. Don't throw your funds to something we're going to talk about later, which is an emergency fund, but put this money aside, 20% a check, 20% a month, put it aside. 20% a paycheck, 20% a month, however you want to do it, put your money aside. And why are we putting money, and why are we putting aside 20% for savings? It's because we want to build a strong, a good financial base and we want to take advantage of compound interest by investing a percentage of this money as well. The more money that we can get into these interest-growing accounts, say your Roth account or your 401k or even your high-yield savings account, the more this money can grow, the better. By paying yourself first, you're setting yourself up for long-term success. Pay yourself first, stop paying yourself last. You should be the first person getting paid from your paycheck and not your credit card or your other obligations that you have because you are obligated to yourself. You're more important than these credit cards and you need to pay yourself first. Just be sure to automatically save your money and send it to a savings account, a high-yield savings account, preferably. Another thing that is keeping you poor, another money habit that's keeping you poor is living beyond your means. I know that right now in this time, it is expensive, rent's expensive, mortgage is expensive, cars, food, going out for fun, everything's expensive, but we still need to live within our means and this thing might have changed. You might have been able to afford something years ago, but you may not be able to afford it now and we have to be okay with that. We have to live within our means and if you want to afford it, then you have to make more money, but we're not going to be supplementing the income that we don't make to spend money on things. We're not going to supplement the income by using, by going, we're not going to supplement our income by going into credit card debt so we can live beyond our means and travel more than we really should be traveling. One of the main things I'm talking about is avoiding car payment, one of the main things I'm talking about is avoiding over-inflated car payments and over-inflated housing. And over-inflated housing, avoiding these two things, make sure that these, a lot of times these over-inflated payments can eat up 50% of your income and we don't want that. For instance, the average monthly car payment is $563 in the US. Now imagine if you didn't get a car payment, but you actually invested this money into the market at a 10% or 12% return. If you invested $563 at a 12% return, if you invested $563 at a 10% return for 20 years, if you invested that car payment that you would be paying, if you invested that car payment of $563,000 and actually put it into a market and put it into the market and it grew at 10% for 20 years, you have $428,000. And for the same numbers at 12% for 20 years, you have $532,000. This is insane because thinking about this, it's insane thinking about this because people have car payments their whole life, coming out of high school, coming out of college, you go get your dream car, what do you need a dream car for at 25 years old? Go get your little beat down $10,000 car, your Toyota Camry, even a $15,000 car, paid in cash and invest the money that would have gone to a car payment into the market. You can have numbers just like this or even better by investing more money. Living within your means avoids the trap of getting, living within your means avoids the trap of you getting into high interest credit card debt and it helps you maintain financial stability. And the third money habit that's keeping you poor is lack of financial education. And the third money habit that's keeping you poor is lack of financial planning and lack of financial education. There are so many ways that you can educate yourself on finances by watching this channel here. And there's many others like Graham Stephan, The Financial Diet, and one of my favorite, The Money Guys. Please look them up. They give you so much good information and I just found a great podcast on Spotify. And I just found a great podcast on Spotify called The Rich Habits Podcast. You guys should definitely check them out. They are so good and they have many, many episodes that are not for only more experienced investors but also beginner investors and where you should put your money. And all these channels and podcasts offers ways to smartly invest your money and good budgeting tips and smartly invest your money. All these channels and podcasts, they teach you how to manage your money and invest properly. So if you're very interested in investing, you need to be sure, you need to, if you want to get out and if you want to get out of, if you want to build wealth, you need to grow your financial knowledge of personal finance and investing. A lot of this stuff is not taught in schools. This is personal, this is stuff that you're going to have to learn on your free time and you need to make, a lot of this information is not taught in schools and you have to learn this on your free time. And a great way to get into financial planning is by budgeting. Budgeting is a great way to know where all your money is going and there's many apps that you can use like EveryDollar, which was created by Dave Ramsey, which I'm sure a lot of you know of, MyNab is another one, and you could just use Excel documents and track your spending that way. Planning your financial future is key when making these important financial decisions. We are not just living for tomorrow. We are also thinking about five to 10 years from now, what we want our life to look like. We are not just living for the moment, but we are also planning for five or 10 years from now to see, so we can know what we want our life to look like. So go out there, get some financial education, watch some more videos on my channel and there's many other creators like I said that are out there creating videos for you, for the beginner that's getting into finances, for the people that are struggling with finances. Now just watching these videos aren't going to fix your finances, you have to then implement these ideas, these lessons into your own personal life. But if you're watching this video, you're getting a great head start on your personal finance journey. And not having an emergency fund and also not having the proper insurance is another habit that is keeping you poor. What is an emergency fund? What is an emergency fund? You might ask. Well let me tell you, an emergency fund is a fund, an emergency fund protects you, an emergency fund protects you from disasters. It protects you from going into credit card debt when you have hospital bills. It protects you from going into credit card debt when your car breaks down, when you blow a flat tire. You don't have to go into credit card debt to pay off these large expenses that just happen out of nowhere. So what we want to do is we want to have a three to six month emergency fund, twelve months is even better but we have to base these on decisions like if you're doing a three month emergency fund, then maybe you have a very stable job and if you ever lost your job, then you can go get another job. Or if you're doing a six month, then you might have two parents, two people working in a household so you don't really need a, if you have a three month emergency fund, you might have a more stable job or you have two people working in a household that brings in a lot of high income. If you have a six month emergency fund, you might have one parent working while the other is at home so you want to have more space and buffer in case things go crazy or you lose your job or something crazy happens in your life that you have to fund and you have this money right here in your emergency fund so you can pay for it all. And if you don't know how to calculate your emergency fund, I have videos where I've talked about how to calculate your emergency fund but I can also tell you right now how you're going to calculate your emergency fund. So what you want to really do here is add up your expenses like rent or mortgage, you want to add up groceries, gas, you want to add up all the main expenses and then once you, all the main, you want to add up all the main expenses that you spend in a month, that you spend or would spend in a month and then you're going to multiply that by three which is a three month emergency fund, six or six which is, or six which would be your six month emergency fund. So for example, our funds come out to about, so for example our funds come out to about $2,305 so our three month emergency fund is about $7,000 and our six month emergency fund will be about $14,000 just round up to $15,000 and our 12 month emergency fund will be about $27,000. So right now we're at about a six month emergency fund but we can definitely do a three month if need be because I do have a stable job so just calculate your emergency fund and see how much you need to have into emergency fund and this goes back to step one which is saving 20% and paying yourself first, this money can go towards your, this money can go towards building your emergency fund. And like I said, an emergency fund provides peace of mind and like I said, an emergency fund provides a peace of mind and financial, and like I said, an emergency fund provides a peace of mind and financial stability when things go bad and unexpected events occur. And for the fifth point, and for the fifth point ignoring, and for the fifth point it is ignoring big expenses like car payments and housing payments. Ignoring these big payments, ignoring these big car payments, these big house payments that exceed your, okay, these large expenses can consume a huge portion of your income. They might consume 50 to 60% of your income, this makes it very difficult to save and invest your money and if you're wondering why you can't invest or why you're not able to save a lot of money, you might want to look at the car payment, the car, the $700 car payment you have in the driveway. You might want to look at the $2,000, the $2,500 house you're living in and then ask yourself what if I cut that down by a thousand, say I cut my housing by a thousand or I cut my car payment by 200 or I just get rid of the car and get a used car which sounds easier than it actually is because you have to have the savings money to buy a used car but just look at that and imagine what your life would be like if you had an extra $1,500 in your account that you could invest or you could go to groceries or you could pay on your kids or you could pay for or you can pay or you can spend on your kids. Imagine if you had an extra $1,500 and what that would do for you. Instead of stretching your budget thin, look for ways to cut these expenses, look for more affordable ways, look for more affordable ways that align with your financial goals. An example would be we want to travel. We're not going to go get a house that takes up 30 or 35 or 40% of our income because what's important to us is traveling so we're going to go for a house that takes up 15 to 20% of our income and then technically you can use the buffer between and then you could throw the extra income that you would have thrown to that more expensive house that took up 40% of your income, you could throw that to vacations because that's what's important to you. It's all about finding what's important to you and spending money in that area. If housing is important to you, then go spend money on housing and if vacation is not important to you, then don't spend money on vacations but if you don't really care what kind of house you're in, if you're not crazy about the house you're in, downsize. Get a smaller house, get a cheaper house and put that money towards something important like investing, like saving, whatever is important to you. This is personal finance and it's all very personal and me personally, I'm not going to buy an inflated house because I value spending money on my kids when I do have kids or going on vacation and bringing the kids because when you have kids, vacations are super expensive, $4,000 and spending $2,500 on a mortgage payment at our income is just not right. It just doesn't, the numbers just don't crunch to where we can actually go on a vacation and enjoy ourselves. And six, this is something that I fell for, I fell for falling for scams and get rich quick schemes and I fell for this, I didn't fall for it but I paid for a course, I paid for a course on tech, doing tech because the whole big tech craze and I put $4,000 into this tech course and I finished it and a lot of these courses, you have to have it within you to actually take the information and apply it to your life and you have to be a go-getter and go get these jobs and apply for all these jobs and do these interviews and actually not just complete the course but immerse yourself within the course and that's just something that I wasn't doing so I spent $4,000, I didn't get a job from it, I guess I got some experience but I wasn't crazy about applying for the jobs and it's been over a year and I paid for it in cash, $4,000 but imagine if I invested that $4,000 into the market and it grew at a 10 or 12% return over time and what that money would be but that money is gone, of course I've made more money since then but you can't go back, there's no get rich quick things, I'm not saying don't do these courses but if you do these courses, just be sure to fully immerse yourself into what the course is trying to teach you and just know what kind of person you are, if you're more of a lazy person, if you think the answers will come to you, then these courses may not be best for you but you need to be able to fully dive into these courses and be sure to have money and don't just use the last money in your bank account, be sure you have that money and some when you're doing these courses. Some programs, like mine was $4,000 but there's programs that cost even more, this guy was trying to get me to do an Airbnb course, it was $10,000 but of course you say you can make so much more coming back, you can make so much more in the return but if I only have $10,000, how am I going to put money into buying a house because they're not going to buy a house for me so you have to have $10,000 but you also need to have about $30,000 or $40,000 so you can actually buy a house, so you can buy the furniture. So there's things that you have to look into instead of just going in here, buying these courses and then not having the money to actually invest into whatever this course is trying to give you. For example, let's say you invested $5,000 into a course but if you didn't invest that $5,000 into a course and you just put it into the S&P which has had a return of about 10% historically and you invested that money, initially you invested that $5,000 for over 20 years and didn't add nothing else to it, it can grow over $32,000 and that's just by putting this $5,000 in there and not investing anything else into that account and just letting it grow, forgetting about it, it will grow to $32,000 but imagine if you actually started putting money into that every month, say you put $500 or $1,000, just imagine what that money would go through. It would double, it would triple, it would quadruple if you just kept investing into this account. So don't fall for these get-rich-quick schemes. I know it's very difficult because our fees are full of it. Once I like something, I keep seeing people sell me courses and show me this rich life they're living but we don't know if this is their real life. We don't know if this will be our life if we invest in this course. So just be careful when investing into these courses. I do like courses and I think they're great but just know what you're investing into and what kind of person you are. But remember, true wealth is built over time. It's built by slow investing into the markets. It's built by slowly investing into real estate and just by being consistent through investing, your wealth will grow over time. And your last and the last money habit to keep you poor is not maximizing income and employer benefits. If you're not taking your employer 401k match, you're losing money. That's free money. If they say put 5% in, they'll match 5%. Just put 5%. It's a free 100% return on your money. Take advantage of the insurance plan they offer if it's good insurance plan. If they have good insurance plans, take advantage of it because they may pay a portion of your insurance plan instead of going somewhere outside of your employer. But also, if you have time after work, work on skills. Work on growing your skills. Work on side hustles that build money. But don't go into side hustles that take too much money from you. You want these side hustles to be profiting and not just taking money from you. So spend a year or two on a side hustle. See how it goes. And then if it goes well, continue to go out of side hustle. And if not, don't just keep pushing money into this side hustle if you're not getting a return on your money. But definitely grow your skills. This is what I do. I come home. I go to work. I'm a 9 to 5. I make really good money. Then I come home and I work on a passion project like YouTube, something I've always been into. And I'm glad that I finally found the niche that I like. Personal finance is something that I've always listened to all the time. And now I'm here explaining and talking to you guys about personal finance and how to grow your financial education. And how to talk to you guys on how to get better with your finances. And I enjoy it so much. And hopefully one day this becomes a full time career for me because I really enjoy talking about money. So there you have it. Seven personal finance. And there you have it. And there you have it. Seven. And there you have it. Those are seven. Those are seven money habits that are keeping you from financial success. I want you to be successful financially. So don't follow these habits. Do the exact opposite. If you're not paying yourself first, pay yourself first. If you're spending too much on cars, don't spend too much on cars. Buy a used car. By paying yourself first, living within your means, planning your finances, having an emergency fund, avoiding excessive expenses, and spending too much on cars. That's it.