Money Mistakes - A Minimalist Approach To Personal Finance

The sad truth is that our education system does not teach anything about money and hardly anything about investing. Most people make the same money mistakes over and over again. Would it surprise you to tell you that around 70% of people live paycheck to paycheck? People like to overcomplicate money and personal finance. I like to keep it simple and I truly believe that anybody can achieve financial freedom!

There are really two simple concepts to understand and put to use if you want to improve personal finances.

1) Spend less than you make
2) Understand assets vs liabilities

Spending less money than you make is a great concept, but too few people practice this. Many people use credit cards with the idea of buying something they know they cannot afford today, and paying for it later down the road. The biggest issues here is that most credit card debt is high interest debt. For example, if you spend $1,000 on a credit card and do not pay off your balance. You may end up paying 25% in interest, so ultimately you will pay $1,250 for that $1,000 purchase. Crazy right? Spend less than you make, save and invest he rest. Even if you invest in an index fund or a roth IRA - just investing $50-100 per month will go a LONG way as it accumulates and compounds over many years.

Assets vs liabilities is a simple concept. Assets are things that put money in your pocket and liabilities are things that take money out of your pocket. Investing in assets such as real estate, rental properties, gold and silver, the stock market - all these assets will pay you over time.

Buying a new pair of shoes every month, buying a nicer car, spending more money on rent for a nicer place to stay - all things tempting, but ultimately a liability - when you spend this money, it's gone forever!

Maybe it's time to develop a minimalist approach to personal finance. Keep track of a personal budget every single month. There are apps you can use for a personal budget or you can use a spreadsheet. This will hold yourself accountable for every dollar spent each month. You will likely find trends and see where you ultimately spend too much money each month and by cutting back in those categories, you may be able to save far more than you think! Even if you have low income or make minimum wage, you can still save money and it all starts with tracking your spending habits with a personal budget.

The wealthiest people in the world invest in assets and not liabilities, that's how they grow their net worth.

The next step you can take is to focus on your earnings. If we earn more money each month, it will allow us to save and invest faster than we previously could. Find a side hustle such as driving for Uber Eats or tutoring online. People get very creative with side hustles and even do things such as couch flipping - yes, you read that correctly. Buy a couch on facebook marketplace for cheap and turn around and sell it for a profit.

It is important to have a good credit score when it comes time to buy or invest in real estate. But do not abuse credit cards... You can take some simple steps to fixing a bad credit score fast. Pay on time every month and do not spend more than 30% of your monthly credit limit. Do those two things and it will go a LONG way in boosting your credit score.

Some other great videos by fellow youtubers that you may find helpful:
- Money Saving Tips || How To Save Money (Best Strategy)
- 10 Tips on How To Save Money Fast
- 7 Places your Money Needs to go (how to save money)
- How much money you should save (amount by age)
- 5 Tricks that save a lot of money fast
- How to invest in 2020 (how anyone can be rich)
- Investing for beginners | Advice on how to get started
- Warren Buffett: How to invest for beginners
- Train your brain to make more money - John Assaraf

[melefante]

What do you all do to save / make more money?

[fortysteps]

Agreed, richness is measured in dollars while true wealth is measured in time!

[charlesmeng]

Very well said, Michael!
I feel having learned a lot from you although you are only about half of my age.

Personally, I've been frugal mostly due to my cultural background. However I made serious mistakes and missed some good opportunities. For example，I was very emotional trading stocks and lost ten's of thousands of dollars. The other thing is that I should have started investing in real estate much earlier, and should have learned to look for opportunities beyond California much sooner.