What Rich People Do To Stay Rich (The Full Guide to Basic Financial Knowledge)

So many people don't handle their finances well, yet when it comes down to it, a lot of the finance world is pretty simple stuff to grasp. This video goes over some of the things that rich people do to grow and maintain their wealth. By watching this you will have conquered a large amount of basic financial knowledge.

I Will Teach You to Be Rich by Ramit Sethi - https://amzn.to/36yhdKt

0:00- Intro
1:35- Investing
5:55- Conscious Spending
8:16- Credit Cards
11:01- Banking
12:48- Goodbyes
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Everything Rich People Do To Stay Rich-
Americans just aren’t handling their money properly in any regard.

Part 1: Investing-
It really turns out to be quite simple. Use the Ladder of Personal Finance:
1. If your employer offers a 401(k) match, contribute just enough to get 100 percent of the match. You don’t pick stocks here, they do it for you.
2. Pay off your credit card and any other debt. The average credit card APR is 14 percent, and many APRs are higher.
3. Open up a Roth IRA and contribute as much money as possible to it. The limit in 2020 is 6000. You can open up a Roth with an online broker. I use Charles Schwab, but Vanguard and Fidelity are also pretty good. When you research them just look at their minimums, and their features.
4. If you have money left over, go back to your 401(k) and contribute as much as possible to it (this time above and beyond your employer match).
5. If you still have money left to invest, , again simply using a market average ETF.

If you don’t have an employer then you take out the 401(k) stuff

1. Open up a Roth IRA and contribute as much money as possible to it.
2. Pay off your credit card and any other debt. The average credit card APR is 14 percent, and many APRs are higher.
3. If you still have money left to invest, open a regular non-retirement investment account and put as much as possible there.

How do you know the amount that you should be investing? That’s where conscious spending comes in.
The Conscious Spending Plan
Separate the money that you earn into categories. The graph should look like this:

Fixed Costs like rent, utilities, etc. account for 50 to 60% of your income.
Investments like your 401k and roth account for 10-15%
Savings like vacations goal, gifts, emergency funds account for 5-10%
Guilt free spending like dining out, movies, clothes account for 20-35%

Be realistic and slowly work towards a plan like this. If you are nowhere near this breakdown, slowly move towards it from week to week.

The third way you are missing out on growing your wealth is with credit cards.
Some actionable steps for credit cards:
1. Get your credit score and report
2. Setup your credit card
3. Make sure you’re handling them correctly by automating full payments.
4. If you already have debt, start aggressively paying it off.

If you have been with them for a long time and haven’t had any problems, then fine you can stay, but what I really recommend is to switch your savings account to an online one. This way you can get a slightly higher interest rate, but also this uses psychology to keep your savings growing. If you cannot see your savings account balance all the time, and you cannot instantly transfer money from your savings to your checking, you are less likely to remove money from it.

Some actionable steps for Banks
1. Open up a better checking account or assess the one you have
2. Open a online high interest savings account
3. Fund that savings account
AFFILIATE DISCLOSURE: there may be a few links in this description that, at no cost to you, will earn me a commission if you choose to click them and make a purchase 🙂

Видео What Rich People Do To Stay Rich (The Full Guide to Basic Financial Knowledge) канала Chasing Down Chano