FREE 2 Hour Financial Education Course | Your Guide to Financial Freedom

In this video, I'm going to share with you the financial course I developed with Jack, a finance coach who will introduce himself shortly. You'll get introductory videos for the money mindset, personal finance, time value of money, personal saving, managing debt, investing, stock market investing with Greg, creating your own financial plan, getting to know insurance, and finally, understanding taxes. For all of these sections, you can skip to any part you like by using the timestamps in the description box below. But first, why do you need a financial education?

Well, for one, financial education is almost never taught in schools, and it's one of the reasons why millions of people struggle with money. You see, financial education is the set of skills and knowledge that allows an individual to make informed and effective decisions with all of their financial resources. It is also called financial literacy, and it's extremely important for you to make progress and get ahead in life. If you are looking for improvement in your personal and financial life, you might be looking for financial freedom and financial independence. It means that you want to reach a point in your life where you no longer have to depend on family, a job, or a company that you don't like for money. The good news is that anybody can attain financial independence with the right skills and tools. You can gain the skills you need to become financially free.

Now, here's Jack with a small introduction of himself.

Hey everyone, my name is Jack Warner, and I'm a financial coach, also a financial education curriculum content developer or writer. Currently, I live in Bard, North Carolina, but I'm originally from Georgia, and I taught personal finance and economics in high school for six years. This is kind of where I've developed my love for personal finance, financial literacy, and consumer economics. Within, uh, within about the last two years of my professional teaching—so year five, year six—I, it was during COVID, and I realized that more than just the teenagers I was teaching needed financial education; they needed to know financial literacy basic concepts. I realized this because I was sitting there and teaching a class, several classes, and adults—their parents, these kids' parents—were writing down notes, participating in activities, getting involved with the with the tasks and the projects we were doing. And I had I had just asked two parents like, "Hey, why are you so involved?" Like, "Well, we were never taught this in school." And so my passion and my goal right now as a financial coach and a consultant with other coaches and advisors and other financial education financial education organizations is to is to bring this curriculum to more and more people, is to help people realize that they can achieve financial freedom and teach that class that they wish they had in high school.

So, after my six years of teaching, I traveled full-time. My wife and I, we decided to travel, and our dog, and I started picking up some more more jobs, just kind of—I wanted to have fun, wanted to explore a little bit of of the country, the US, but I also wanted to um, change shift jobs. Teaching, as much fun as I had teaching personal finance, it wore me out. So, in the process of the traveling, I started picking up more curriculum content writing jobs for finance and economics and uh, for about a year. And then at the end of our travels, I really started focusing on how I can help others with financial literacy. So I joined in with some other coaches, I joined in with some education programs, I joined in with financial advising organizations, Credit Unions, different different all different types of clients from all different industries and was really wanting to to build content for them. So, during that process of of building my my own writing portfolio and helping people build videos or articles or educational posts or quizzes or whatever lessons, I started my own financial coaching business. Now I'm in the process of it of launching it, but at the same time, I wanted to I want to go ahead and get that started, so I'm hoping that will be launched in 2023. But in the meantime, I need to do something, so I help people build curriculum; I try to volunteer my time, and I want I love just to even just random people, just assisting people for free right now um, with their financial journey. So I'll talk about, you know, what they can how they can save on taxes, um, different income streams that can probably create; I help friends and family and pick investments, um, get out of debt, different types of thing, common sense things, but they just need someone like me; there's thousands of other people like me to help them with to help them through the the basic steps to achieve their their financial success success.

So, currently, yeah, I do build financial curriculum for people; I I do videos; I teach uh, lessons; I help build quizzes and assessments; and I help all types of financial professionals like financial coaches, advisors, um, I'll consult on education for high school, um, different types of financial organizations. But I say all this, one of my biggest passions, whatever position or whatever title I have, one of my biggest passions in life is to help help others achieve financial freedom and know that they can do it, you know, know that they're not going to be in the debt spiral forever or that they're going to be stuck at this income forever, or should give them the tools, give them the the knowledge necessary that they need that that person needs or that family needs to invest in their future and secure their future. So I hope throughout this course we can accomplish this together. I'm teaching all types of topics, very very broad videos covering several different topics. We'll go through uh, money mindset, how you can change your behavioral economics and different psychology of money uh, topics so you can approach money in a healthy way and handle money in a healthy way. We'll talk about income; we'll talk about investing; we'll talk about debt management, credit scores, taxes, everything. Creating a budget will be a big point; in fact, I think I that's like a theme of my videos; I I almost always mentioned budgeting; I think in every video, so you'll hear me say it a lot, and it's important; it's why I say it a lot because I can't remind myself enough to make sure I'm budgeting. But throughout this course, I want I want I want to help you or your family and your family walk through the steps to achieve financial freedom, very basic steps; there's no there's no quick way to do this; sometimes you just got to put your foot down, put your head down and start working, and this these are the steps I teach, and I hope we can accomplish this together, and I hope you enjoy this as much as I do.

Now I hope you are ready to learn because these videos are packed with information. Get your pens and notebooks out and make sure to give this video a thumbs up for that YouTube algorithm. And remember, if you want to get the whole course, it cost only $39, which you can get by clicking the join button and becoming a member of the channel. With that said, here's the first module: Intro to Money Mindset.

Hey my name is Jack. In this video, we're going to be discussing the power of having a positive mindset. We're going to compare it to how it can impact us with a negative mindset, and where this can affect us in life as well. So the first thing I want to talk about is what exactly is a money mindset. So we might just we might not know what exactly a money mindset is. So a money mindset describes our attitudes of behaviors when it comes to dealing with money; that can either be two different schools of thought here. You can either be a positive attitude person where your change of behavior and activity creates opportunities; it creates financial situations, and it also bleeds into other areas of your life where you start creating more confidence and more positive decisions in other areas and choices and decisions in your life; whereas a negative attitude, equally as powerful, because it can impact our financial future and it harm our financial life, and once it hardens our financial life, usually this this bleeds into other areas of our life as well. Well, so what affects our money mindset? So a lot of you might be thinking, you know, what what will impact my money mindset and how can I change this for the future? Well, the first thing and probably the most influential is our history and experiences with dealing with money. So if we had a bad experience with money, maybe we lost a lot of money gambling, or maybe we made a poor investment choice, or maybe we just don't know how to make money, and that can affect, you know, our experiences dealing with money; that history can really impact us and our money decisions and our attitude towards money. Also our history, history plays a big role; maybe you grew up in a family or an environment somewhere where money was just always it was never discussed, but it was always an issue for whatever reason. This leads me to my next point, discussion surrounding money. You might be in a friend group that always is is negatively talking about money, how they don't have enough, how they don't have to make anymore, how money is evil, whatever that might be. Uh, your family can also talk about this, and some families, for whatever reason, in Western cultures—well, I can't speak for all cultures, but I know for sure in the United States, discussion surrounding money in our families is very taboo; it's very unheard of; you're not supposed to talk about; you're not supposed to ask your your mom and dad how much money they make or how much money we have or whatever it might have been. Um, so discussions surrounding that can really impact us as a as a child, and it can lead into our our adult life. And then finally, how we're educated about money, and again, I can't speak for all Western cultures, but I know for sure in the United States it's not how we were educated about money; we were not educated about money; we're not educated enough about our personal finances; it's just only been the last maybe five years where financial education has taken kind of a rise in a uh, an emphasis in high schools and middle schools around our country, but we've gone decades, centuries without talking about personal finance, middle school, high school, college and beyond.

So how can we characterize and identify negative versus a positive mindset? So where where can we see this? I'm going to go through the negatives first. So a negative money mindset, and when I go through this list, think about these these characteristics of a negative money mindset and see if they play into your life any. So a negative money mindset: you're you have constant anxiety around money, or maybe we're very unorganized; we procrastinate a lot; we have a negative outlook on on life, so not just on money but just on everything else; we have a fear of money; we're always negative about money topics, like, "Oh, well, the economy is always going to be bad, or you know, the I'm always going to be poor, or I'll never make enough money," intimidated of taking on some difficult tasks. So pause the video if you have to, see if any of these kind of plays into your life any. Where on the other side, we have a positive money mindset. A positive mindset is we're building confidence now; we're confident when it comes to making decisions, and not just money decisions either, other decisions in our life too; difficult tasks are handled confidently; we're okay with taking on difficult tasks now; we're usually optimistic or at least overly—I wouldn't say overly optimistic, but realistic optimistic as well; we show self-control over many areas of our life; we know we're not overly spending; we're investing a solid amount of a healthy amount of money; uh, we're self-control in our diets and our nutrition and our and our other habits in life; when a problem arises, we're always looking for a solution; we're not just blaming people; when we're when we develop a positive money mindset, when a a problem is going to come up, whether you're negative or positive money mindset in life and how we approach that problem really determines our mindset. So if a problem does come up, we're not blaming somebody else or or just constantly talking about the problem; we're looking for a solution and how we can overcome that obstacle. And of course, I'm going to talk about this more later on in this in this video; we thirst for knowledge; we want to learn new things. So compare the two; which one do you line up more? And sometimes it's a little bit of both; sometimes some days you have positive, some some days you have negative, and that's okay; that's going to happen. So negative mindset leads to spiraling; we start spiraling out of control when this occurs; we feel bad about everything and that we will never be good at money; it's kind of a defeatism attitude; whereas a positive mindset leads to more momentum; you start creating healthy habits; you continue to build strong confidence towards life and money.

So here are some common money negative money beliefs, and you've probably seen these before, and I'm just going to post them on here so you can look over them, but you definitely have seen at least a couple of these, or heard a couple of these: Money is evil; the root of all evil; it makes people selfish and evil; money leads to greed; money can't buy happiness; rich people are lucky; I'll always be poor; you got you got to have you got to have or spend money to make money. So all these negative money beliefs are stemmed from a poor or negative money mindset; it doesn't necessarily mean that they're not totally wrong; we have to acknowledge that there are some people who are rich that maybe they were born rich, or there are some people that have a lot of money that use money to be evil, but that doesn't generalize; you should never generalize the entire concept of money and how we deal with money as you know, because a margin of people do that thing; a small margin of people do that thing doesn't mean it's it's necessarily true for the majority of people. More importantly, money can be used as a tool for positive change. So we need to understand that that it's not just because you know we hear some negative things about money, it makes it true for every you know, for the rest of our lives; money can be used as a tool for positive change; it helps us build wealth; we are able to build wealth, and then we can spread that wealth out to bless others or to encourage others or whatever it might be, and it helps secure our financial future, and not just for yourself; this is where a lot of people get mixed up with wealth and greed. Building wealth, you're not just building wealth for yourself; usually you're building it for for a business, or you're building you're securing the financial future of your children and of their children's children; you're helping other people out; of course, leads to my next point, helping others. So once you build wealth, you can start creating uh, opportunities for others; you can start donating money; you can start funding charities, philanthropy ideas, all that stuff, starting businesses, investing in businesses, which is huge; it helps our economy more if they're more wealthy people, and people are taking charge of their personal finances; they would they would help out the economy more than a poor person with a bad money mindset just constantly complaining. And of course, you can create opportunities, job opportunities, more business ideas, helping people go to college, whatever it might be, protecting the environment, so many different opportunities once you build wealth, and you're buying yourself time too; you now have secured your financial future, and you're free; you don't have to worry about paying debt.

So how do we change this mindset? You're probably thinking, "Well, Jack, this is good and all, but how exactly do we change this mindset?" Well, there's several habits that I want you to start trying today um, or you know, as soon as you can, and write these down too, so it helps you focus on what you need to do. First of all, know that you are in control of your life and your money choices; just because you grew up in a poor family or a family that didn't talk about money or whatever that doesn't matter; that no longer matters to you because now you are in control of your money, and you need to know that your money choices are your decisions alone. Understand that taking control of your habits takes work and effort; I can't stress this enough; it's not just going to happen; you know, I I can't remember who quoted this, but taking control your personal finance life, 80% of it is is your behavior and attitude; 20% of it is just the knowledge of knowing, you know, investments and budgeting and all that; so 80% of it, if you can do that, that's the work and effort; that's the positive attitude; so it's going to take work and effort; not it's not going to just appear; you have to spend time actually trying to do this and changing your your your life. Make sure you give yourself praise for the small wins; this is huge; you know, recognize the incremental changes; you wrote down a budget, awesome; give yourself a win; go out to eat a little bit, splurge just a little bit here; um, don't blow all your money on something crazy, but enjoy it; have a little party. Set goals, and I'm gonna talk about this more too in the in the next couple slides; set goals that you want to achieve and commit to them; give yourself some grace during the good times or the bad times; so if something happens, if you slip up, you accidentally impulse buy something or you make a poor investment, don't just spiral out; give yourself some grace; say, "Okay, I messed up; this is how I'm going to fix it." Eliminate distractions and negativity in your life; this is huge; if you're on social media—I've eliminated all my social media—but if you're on social media, it can be used for good, so I won't get into that debate; it can be used for a positive, but if they're if you're following somebody or something's popping up in your feed that's that's distracting you, that's bringing negativity in your life and hurting your your money mindset, eliminate it; don't follow that person; ignore them; even cut that person out in in your real life too; if you have somebody that's negative in your life, it's saying, "Oh, well, you you always will be in debt; you'll never make enough money," then cut that person out; they're not your friend; you need to get people in your corner that will support you and stay on your path to success. So it kind of goes with that one; stay on your path and do not compare—I just mentioned social media—do not compare; don't compare yourself to others; know that you are enough, and everyone's life in situation is different; so just because you see something on Instagram and someone's spending a lot of money or traveling a ton or whatever, you don't really know what's going on behind the screen and behind their their keyboard or whatever; so understand that that that's their life, and that's okay; you just got to do what you got to do; stay on your path toward success.

So creating goals, creating goals is important; the I like going over this because a lot of people get confused with how exactly do I create a goal; you need to make sure you have short-term goals, like a month, less than a year; midterm, year to three years; and long-term goals, you know, three, five, 10 years plus; you know, what are your financial goals? What do you want to achieve? Write these down; they need to be quantifiable and specific goals too; you need to be able to define these goals; write them down; they need to quantify; what I mean by a quantifiable is they need to count towards something; so just say, "I want to be wealthy," or "I want to be debt free," or whatever it might be, or "I want to create a budget"; you know, when do you want to create that budget? How much money do you think is enough to to be wealthy or whatever it is; you know, when do you want to start that business? How much money do you want to invest? Be specific with your goals; write them down and define them, and create reminders everywhere; put Post-it notes; tell somebody; set reminders on your phone; whatever it is; build accountability; so get a support group; if you're married, tell your spouse; if you're if you have a family, tell to get the whole family involved; that that's awesome for accountability; get a mentor; whatever it might might need; and that kind of helps gather support too. And then lastly, we want to study, learn, and talk about money; so make sure with those goals, this will help achieve those goals; study, learning and talking about money. And then I I didn't put these in any particular order; you can do this however you want, but plug into a money mindset support

Group listen to podcasts, watch videos, take a course on money and/or a positive mindset. Read books about money, self-help, psychology—so many; there's so much great material out there about reading books. I'm sorry, there is good information about reading books, but about money there's so much good information about, and so many books—thousands of books—about money and self-help and positive mindsets. Or five; it doesn't have to be in any order. But hire a financial coach, or hire a planner, or a mentor, or talk to your psychologist, or whoever—a mentor, somebody that you admire. You know, grab a cup of coffee with somebody who has seemed like they've been a positive mindset for a very long time, and discuss that with them. And all this, I promise you, if you start doing these habits, you will see a slow—it won't be a quick overnight change, hopefully it is, that'll be awesome—but you will definitely see a slow positive mindset change in your life, and you'll see that happen and change in other areas of your life as well.

Everybody wants to get rich quick and get to that retirement picture that they always had in their head, and get to that wealthiest point in their life, but hardly anybody wants to do the work. Unless you are born into that lifestyle, or you inherit a bunch of money, you have to work hard to build that wealth. You're going to have to work hard and get on a plan to get you to that wealthy point. My name is Jack, and in this video I'm going to be covering the—the big—the very first step, big step to help you get on that wealth journey.

So there's a lot of confusion and a debate really about, you know, being rich versus being wealthy. A lot of people, they want to get rich, but understanding just being rich isn't enough. Being rich can be the same as being poor, at least the mindset—maybe not financially, in the outlook of life, but the mindset can still be the same. We want to—we want to approach money and achieve wealth; we want to be able to—to get to this point. So I want to show you the—the differences between being rich and being wealthy.

Being rich—this is kind of the mainstream push of: go out, work hard, work 60, 70, 80 hours a week, make a ton of money, spend a ton of money. This is kind of the mainstream approach to this. So you're going to have an extravagant lifestyle; you're usually very popular, or everybody knows you, at least—or at least the spending style that you were in is well known. Spends money, usually spends money to impress; has more liabilities than assets, and I'll discuss more about that later and how that's important to your wealth. Can be living paycheck to paycheck. I've heard of people with incomes $250,000 plus still barely making it month out of month out of month because they have spent so much money, and their liabilities heavily outweigh their assets. So all their paycheck is going to—to support basically this extravagant lifestyle, and they're not in control of their financial health.

Versus building wealth and being wealthy, and this is not mainstream. There's a great book—there's so many great books on this too—about building wealth versus being rich. Usually boring, not well known. Millionaire mindset is kind of the—if you Google that and start researching this, you'll find that a lot of millionaires—there's a big study of thousands and thousands of millionaires—they're not well known; they're—they're just—they're just living their life, putting money in—in things that aren't as popular, not having these crazy parties, or buying these fancy cars, or living in these huge homes. They save and invest money; they have more assets than liabilities; they created multiple streams of income, so they're not totally reliant on their job, on their primary source of income, if that's the case for them. They have achieved financial freedom. So we are going to be focusing on this instead of this. So we don't want the mainstream get-rich-quick, you know, Instagram lifestyle, because that's usually not how it really is portrayed. That's if you look at economics and you look at all the different financial studies that have been done—being rich and that spending all that money isn't—not—it's not going to bring happiness, whereas wealth and building wealth will.

So the first thing we need to do to—to get on our wealth journey is we need to track our spending. And this is also—we'll talk about budgeting in a later video, but this is a very important step, not only to help you with your wealth journey, but also in budgeting and getting control of your finances, which all leads together. I mean, it's all ties in together. So when you're tracking your spending, the first thing you need to do—or the first thing you can do—isn't necessarily need to be something you need to do—but keep a record and write down everything you spend money on for a whole month. So start doing it. If you—if you don't do anything else and you don't know how to do anything else, you're not good with technology, and you're just—you've always been the person who writes things down, start writing things down. Keep the receipts; start writing everything that you spend money on down. Download or print all the bank statements from last month. So if—if you don't want to do this, you're like, "Ah, I can't keep track of all that," and you know you've used your debit or credit—or credit card, download all your bank statements from last month, everything—all the statements that you have money coming in or out of, but especially out of. Print all that off; start looking it over; track spending in a spreadsheet. Maybe you have a spreadsheet, and you're a spreadsheet just geek nerd and you love it. I can say that because I am, and you can put all your money into different spreadsheets. Use the spending tracker app; this is also nice. There's many—I put a few examples here—it'll automatically do it for you. You got to connect your bank account, but beware, some of these cost a fee, cost some money to use their—their business, and it'll automatically do it. And then once you do all this, whichever one you choose, or maybe do all of them, who knows. I've heard of people doing two or three of them. There's even some—there's more methods out there to track your spending. I've even heard of the glass jar method, where—or the envelope method is what is known as: you put money in the envelope, or you put money in the jar, and that's your cash—um—for your spending; also a budgeting tip. But once you do all this, start categorizing all of your spending. Put things in, you know, and utilities, essentials over here—um—entertainment, clothing, food, groceries, gas, etc., etc., going on down the list. There, you want to start categorizing that because you want to see where are you spending money, because once you do that—once you start tracking your spending—you can start finding areas of spending that you can eliminate today. You'll be surprised; you'll be shocked, like, "Oh my gosh, I spent $300 on—on gas, or I spent $200 on clothes last month, and I really didn't need any clothes," or maybe we went out to eat too much, or maybe I can really start cutting down my groceries, or maybe we can turn the air conditioning up one more degree and save on utilities because, you know, I get kind of cold. So start looking at things that you can start eliminating, and we'll talk more about this too in a later video when it comes to budgeting.

And lastly, why we are tracking our spending is because we want to make sure that we are focusing on our wealth-building—um—mindset. So we want to be able to generate a personal balance—balance sheet. And if you've ever done a business balance sheet, this is very similar—the ins and outs basically—and this is how it looks. On the left column we have our assets. So this is money—assets are things of value that bring value to us—um—and we don't have to pay money to. So assets—any cash you have on hand, money that you have, any bank accounts that you have money deposited in; if you have a cash value life insurance, include that current value; all investments, property that you own, cars, real estate, recreation vehicles, etc., and add that into the—to total column and get your—and get your total assets. And then come over here to the liabilities column, and this is all the money that you owe. These are things that you owe money on, and it's money that is going to leave you at some point in your life. So mortgage, rent, car loans, student loans, any kind of loans outstanding, credit cards or balances, or other personal loans, any unpaid bills, unpaid taxes, unpaid medical bills, etc.—anything that you owe money on. I'm probably forgetting a few things in these lists, but anything that you owe money on, put into this column and add it up, and you have your total liability. So how we figure out net worth, and this is so fun because this is the net worth definition: total assets minus total liabilities equals net worth. Now, all this is the current value of your total assets or total liability. So all this can change, and we're going to talk about time value of money because of different interest rates and everything that's going on. But when you're doing this, is the current value of your total assets, current value of your total liabilities, and that equals your net worth. So now you have a—you have a good starting point to start building towards wealth, to start generating more wealth. You have—you're tracking your spending; we—we over this video we talked about how you can track your spending, and we started focusing on, you know, where can we increase our assets and where can we lower our liabilities to find our net worth.

Hey, my name is Jack, in today's lesson we are going to be covering the time value of money. So this is going to be focusing on the different concepts of how money can grow for us over time, and how we can use time to increase our wealth, or how it can hurt our wealth. So let's get into it. The first part we're going to cover is just the principle of time value itself. So what exactly is the time value of money? So the principle—the—the debate between economists and financial experts is: it's better to have money now so you can use it than receive the same amount of money later. And that can—that's very basic kind of outlook on the time value principle of money. But what happens is this goes for anything—any kind of money that's earned or any money that's spent through loans. So the—the argument for earning money now or—or trying to earn as much money at a younger age—just kind of the—the sounding theme of this is: our earning potential is much higher today; it's—we can do through investments; we can save money; we can use the money for—for better things now, today with our money—um—so earning as much money as possible at a younger age or—or in the now, in the present, helps us to create money and earn money—um—in the—in the future. And there's a whole formula for this if you're interested, if you want to nerd out, like, you can take a look at it—um—and you can pause this video if you want to take a look at time value formula, but not too important for us, but just know that there is a bunch of math involved with this argument, with this principle.

So how can we use the time value principle in our financial journey? Now, what can we do to—to leverage this? The first thing is we can find ways to earn as much money as we can now. So find ways to—and that doesn't mean, you know, get a better paying job, though that's part of this. You can get higher income; you can find ways to earn more money, work side jobs, whatever it is—get a side hustle, start a business. This also can mean, though, save money; saving money, investing money—a big part of that—a big part of that saving money is eliminating debt spending. So cut up your credit cards; don't take out any more loans; you know, stick with a debt you have—you have already, but don't add on to that; and of course pay off that consumer debt as soon as possible. So pay off those credit cards; pay off that personal—whatever it is that you need to—to pay off, get it done. Then start creating multiple passive income streams. So we'll—there'll be another video about this topic, but create other ways to generate money, to earn more money—kind of goes back to that first step. And then, of course, invest as much and as often as we can, and I'm going to talk about this later on.

So part of investing is using compound interest to grow money. So how can I grow—grow money and make more wealth, generate more wealth, and let my money work for itself? So if you don't know what compound interest is: two basic interests—there's simple interest, and then there's compound interest. Compound interest is interest earned on top of interest. And the thing that we need to be aware of here is: I put money earned, interest earned—this can also work backwards against us. Be aware that this may—you may be paying compound interest on loans that you owe. So if you miss payments, you got to pay fee, whatever it is. Some bank tools that you can use to earn compound interest: savings accounts, CDs—Certificate of Deposits—and money market accounts are all good ways that you can—first of all, save your money, so help your budgeting, but also you can earn money on top of money. So how—how it works is: you put your money in—in the bank account, they pay you an interest rate; you put that interest—whatever it is—say it's—it's usually not much, say it's like $20 for three months—you put that $20 back into that account, and then all of a sudden you have your money that you initially put in there plus your $20 on top of that, then you get to earn—earn interest on that. So you're—you're earning interest on top of the interest. And there's some investing tools that we're going to talk about later too to earn compound interest: corporate bonds, treasury bonds, high-yield funds, or stocks. These type of—of assets pay interest; they usually pay some kind of—um—interest every month, maybe every three months, depends on how you set it up, and you can reinvest those—that interest and all those—um—those gains that you make in that investment and earn even more money.

So a thought exercise for you: pause this video if you need to. I want you to pick one of the two choices. So think about this: pick one of the two choices. The first choice: you're given a million dollars right now, no questions asked, and do whatever you want. Walk away—whatever you can—get a—so you can get a million dollars; or you are given a penny today, so just one cent, but you're guaranteed that they will double in value every day for a month. So pause this video real quick—which one would you choose? So this is an age-old question that you usually see in economy—in economics or in a personal finance class. If you're just given a million dollars today, you could—the argument is—I don't like that—this—I got this from DIYinvesting.org, but it's flat. If you just earn a million dollars today, most people would spend it; that's why it's—it's arguing that the time value over 30—over a month is—is not good—um—some people say, "Oh, well, you can invest that a million dollars," and you can, but this just showing you compound interest and how it—how it can work. So if you get a penny and you start doubling it, you know, you're going to be flat for a long time, but when you get to that day 25, it starts increasing, and you end up by day 31 with almost 11 million—penny versus a million dollars. Of course you can go back to that green line, like, "Whoa, on day one if I had a million dollars, I can invest it right now and make even more money"—um—but that's just a—it's just a look and argument of, you know, if I doubled my compounding interest versus most people—they earn a million dollars right away, they're given to it, like the lottery winners, they end up spending it.

So how can loans—how loans can impact the time value of money? So this is important for us to understand the money that we spend versus saving—like how—how much—if we're in a lot of debt, this can impact our potential wealth. So interest charged versus interest earned is a—a very important point we need to talk about. So interest charged is money that you have to pay when you take out a loan. So when you get a loan—no matter—most every loan that you ever get out from a bank or some kind of financial institution—not only do you have to pay the loan amount, you also have to pay the interest; that's—that's part of the charge, since they're giving you that money, since you're—it's a service that they're offering you. Versus interest earned is money that you earn, of course, and what we've already discussed. So interest charged that goes on to consumer debt, and these are the biggest items—I'm not talking about mortgages right now or business loans—consumer debt is the biggest thing that Americans need to focus on: consumer debts, personal loans, credit cards, auto loans, student loans, and I—I've seen just recently—credit card loans have—it's increasing—credit card loan debt has increased even more this year than last year, and it carries the highest—they—these type of loans carry the highest interest rates and often the least favorable terms as well. Consumer debt, like credit cards, usually have what's known as a variable interest rate, and that—that rate changes depending on numerous factors: is the economy doing well? Is your credit score good? Is your credit score bad? This all depends—is all—it could change that rate and not for the—for the best. So I think right now a credit card you can get like 17, 18% interest rate, and that can jump up to 28% next month if something happens. So if you don't know how it works is: with variable interest with consumer debt—a principle is the total amount of the loan. So whenever you go to get a loan—and credit cards are a little bit different—but say you get a personal loan, you get a $10,000 personal loan, that's the principle. On top of that there probably is a variable interest rate built in, so you have to pay down the principal through what's known as premiums each month—um—it can—it might be something different, depends on your—your loan situation—but that's your monthly payments that can be principal plus interest that should be—that you'll see it—you'll see how much principal you're paying down versus how much interest you're paying down. And the more—and more—the higher the principal or the—the variable rate of the consumer debt you take out, the more interest you got to pay. So this hurts the time value of our money because this is money that we have to pay. If we get rid of those interest payments, we can get rid of those—those premiums at principle, then that can be more money that we put in our own investments than less money we put into our—to our debt obligations. So just know that this interest can increase; it can start compounding against us. So just like we can earn a lot of money through compound interest, we can also lose a lot of money and owe a lot of money.

Inflation—inflation is a big topic right now in the United States, across the world, but especially in the United States since our inflation rate just shot up this year. Inflation's impact on the time value of money. So inflation—if you don't know what that means—it's the general rise in prices. So normally there's always some kind of level inflation; the normal level is 1 to 3%, just because there's new businesses being developed, more people are being born, there's a growth in the economy in some sectors. So you always want a—a normal rate of inflation; usually you want it around 2%; that's kind of like the—the target. A normal savings account earned interest today goes from anywhere between zero and 2%. I've never seen it at 2%, so you got to have a lot of money—money usually to get that kind of interest rate—not that good though. So usually economists and financial experts will say that we need to find investments that earn us around 4% or greater, that way we're beating inflation and we're earning some money. However, inflation rate today

As of the reports of July 2022, so last month—it's August now—and we'll get the reports at the end of this month. But inflation, as of July 22, 2022, it depends on it depends on where we get our information, but right now there's several sources saying somewhere between 8 and %.

So it's tough. It's tough. You—it's hard to find; need to—I can't put—need to find investments to earn four plus percent or or eight to nine plus percent. That's difficult right now. This is a weird time though. This is not like the normal. It might be the normal for the next few months, but eventually, just like the economy has several times—I mean, our inflation's been higher than this even—I think the last time it was this high though was in the 80s.

So inflation rate, it can affect the time value of money because we we can't earn this much. So money now for something is going to cost—if this rate continues—it's going to cost us a lot more money in the next few months or the next year. So hopefully, eventually, it'll start going down. Just know that this is not the norm and it's going to be difficult for a little bit, but we need to understand if you can find investments such as real estate that can actually beat inflation. So real estate is a great place to be, um, if you if you're able to find ways to invest in real estate uh that can combat inflation for us.

I like to I like to show this US inflation calculator. So if if I click this site, it goes to this calculator here, and you can type in it all the way back to 1913, but I just like to see, you know, since 2019, before before the pandemic, you know how crazy something was. So I'm going to type in like $330,000 just to keep it simple here. You know, if I wanted a car in 2019 at $30,000, I'm still eyeballing that car and I haven't done anything with my money in 2022, as of uh as of June—when they—oh no, as of July, there we go—the Bureau of Labor Statistics had produced more information there. So that car at $30,000 would now be $34,000. So I've lost the time value of money; I've lost almost $5,000, especially if I was just saving that money and not investing it in any way. So the the cumulative rate of inflation is almost 16% just three years.

So all this can—it impacts the way we view money, the the long-term outlook of our wealth, and how we can get around it. Some people want to get ahead in their personal finances and start making a financial plan, and the first thing we need to do is start getting in charge of our savings, start building up savings, saving goals, and get on a plan to help us save. My name is Jack, and in today's lesson, I'm going to be covering different savings tips, different bank accounts we should use, and the process it takes to start saving.

So first thing we need to do, the very first step is build an emergency fund, and this fund will range—I I put different amounts here—it's going to range to different numbers: 500 to 2,000, 5,000. This this just depends on your lifestyle, where you live, uh, your job situation, if you have a family or not. All that factors in on how much this should be. Just know that this is your starter emergency fund. If you just don't know how much you need to put away, just stick to $1,000 for now, and that's just—use that as your base level emergency fund. Again, start emergency fund; you're going to want to build that once you're financially able to build that even more. It should be covering about three to six months of living expenses or more if you want to, depending on your comfort level. And what I mean by living expenses is essentials only, needs only. So what you would do to figure this out is you would pick one month to cover these things: so rent or home payment, food, transportation, and utilities. Those four things—I I would I would calculate that out for the whole month, and then I would multiply by how many months I want covered. So I want at least three months and at most six months, if not—I, you know, can—you can do as much as you want; it's why it's called personal finance—but I need at least three to six months of these expenses.

The next thing I need to do is start a budget, and there's all different types of tips and strategies to start a budget, but basically you just need to do one. If you're not doing anything, pick a budget plan and stick to it. You can write it down; you can have an Excel program; there are there's some online banks already have built-in software to help you with your personal budgeting, and there's even there's even apps that will automate all this for you. I'm going to share with you just one kind of easy budget tip, budget strategy, whatever you want to call it—plan—it's probably one of the easiest plans just so you can just get started and get going. So it's called the 50/30/20 rule, and what this means is you take all of your income, all of your after-tax income, and you divide that up between 50, 30, 20: 50% of that of your money goes to your needs; 30% of it goes to spending money on your wants, so that's like toys, you know, going out to dinner, maybe entertainment goes in there; and then 20% of that goes into savings and investing. Very simple rules to follow, and again, this is great for anybody just doesn't know and just needs a needs a plan right now, needs to put some action on their financial savings; this is a great place to get started, a great rule to follow to get started.

Now that we know some some different tips here, now we can start creating separate bank accounts. So we want to create a savings account—I'm going to talk more about savings accounts here in a second—we want to create one just for an emergency fund, and then we can create more—create one for each savings goal. So say say maybe we want to buy a car, maybe we want to move out of our parents' house, maybe we want to buy a house, maybe we want to start renting, maybe we want to go to college. We create an emergency fund that's going to be—we, you know, put $2,000 or whatever our monthly expenses in one account; we leave it there; we don't touch it; we don't look at it—and then we create different savings accounts for each goal that we might have. We also need to understand the difference between checking accounts and savings accounts. So checking accounts—these are personal spending accounts; you're not going to put much money in these—money in these accounts—they can be withdrawn as many times as you want; you can go up to the teller and withdraw it; you can swipe it on an ATM card or debit card; you can withdraw it online, whatever you need. So checking accounts—these accounts should be used for our day-to-day expenses, like we're buying groceries, we're filling up our gas tank, whatever—um—and they can be used for expenses that you have throughout the month that's budgeted. Make sure I say that. Savings accounts are different. Savings accounts are reserve financial accounts to store money. So we put money there; we're not spending this money until something happens. One one or two things need to happen. There are not to be—they are—these are not to be used for any expenses except for emergency fund or the savings goal was achieved. So if I have an emergency, a legit emergency, then I can spend that money, or if I have a savings goal of, say, I wanted to buy a $5,000 car and I finally have that $5,000, and then I can start using that money. Uh, savings accounts will have restrictions and limits, so that's why they're they're built—they're built that way for a reason.

There are many different types of savings accounts, so I'm going to go over these and also with how these accounts are best used. So the first type is a high-yield savings savings account. So it's different from a traditional savings account, and today, some people might argue there is no high-yield savings accounts because savings interest rates are so low right now. You would be right. So high-yield savings accounts—these are these are accounts that you could find; there are some online accounts that have higher than average interest rates, and by average I mean compared to other bank accounts. These are best used for starter savings accounts and short-term goals. Another type is a money market account. So a money market account is another type of high-yield interest-earning account, and they usually will have some kind of a minimum deposit requirement. So that means you need to put at least $1,000 in the start, or I've seen some as low as $100, but they will have some kind of limit, and there's transfer limits. So sometimes I've seen, you know, three—you can only—you can only transfer money out—you can transfer as much money as you want in—I need to make sure I I disclaim that you can put as much money as you want in, but to take money out, to transfer the money out, they'll usually have like a three-transfer limit or maybe five-time transfer limit. And this is best used for emergency funds or medium-term savings goals.

Next one's a CD. The CD is kind of a hybrid of invest investment and a savings account. It's another high-yield savings tool that banks can offer, but there's extremely—there's a lot of rules and restrictions on how you can access your money. So it's best used for extra savings and long-term goals. So usually it's one of the highest interest-earning savings tools, accounts that you can use, but you can't access your money for three to five or one year; there's some even with like a six months. Um, so you put your money in the CD, and it can grow with interest, but you can't touch it until that maturity date comes. So say you buy a one-year CD from your bank, you can't access that money for a whole year. Now you can, but you got to pay a huge penalty, and you don't want to do that because then you're losing money. And then we have tax-free savings accounts. I'm going to talk more about this in in the later part of this lesson. So tax-free savings accounts are savings and investing accounts that have tax advantages that are built in, and this is usually aimed for things like health, retirement, and education.

So let's talk about some of those health or some of those uh retirement savings and education savings plans. So retirement savings accounts—you have IRAs and 401ks are the most common one—and there's two different types of individual retirement accounts—that's what IRA means—we'll go over those first. So traditional IRA—this is before-tax money, so you're putting money into this before taxes, and you can write this off on your taxes as a tax deduction each year. Both traditional and Roth IRAs, as of 2022, currently have a $6,000 contribution limit. You can put as much as you want, but for tax benefits, you can only put $6,000, and anybody can start an IRA, so anybody even if you're you're 18 years old and you don't have a job, you can still start an individual retirement account. No matter what job you have, you can start an individual retirement account. So what's cool about this is before-tax money—the the money in here grows; you can invest it in whatever you want; it's tax-free—but when you retire at 59 1/2 or whenever you retire—it's got to be at least 59 1/2—you have to wait until then to to withdraw without being penalized. Growth is tax-free, but withdrawals are taxable at that time. Opposite opposite of that, Roth IRA is after-tax money, so your income has already been taxed, then you can start putting that money into an IRA. Growth is tax-free, and then when you retire, there are no tax withdrawals at all, so that's awesome. Some people prefer Roth IRAs because they don't want to worry about taxes. Then there are ways you can use both, and you can open up both accounts if you want to. Some people have both Roth and traditional IRAs. And 401ks are probably going to be one of the first things you run into if you haven't already run into that. These are employer-sponsored retirement plans, and usually they're using a 401k setting—I'm sorry, a traditional Roth IRA 401k—they'll be called traditional 401ks; there are some Roth IRAs—they'll be named Roth 401k—um, so just be aware of of which one your employer is using. And what's nice about these is you put in some contribution, and then your job puts in some contribution too. So they'll usually match you 5% of your income. I've seen some at 10%. I think like the industry norm or industry meaning all of the labor department in the United States is about 3 to 5%, and they'll match you on that, which is nice because you'll get free money out of that.

The education savings accounts—so if you're starting to plan for your education or maybe you're planning for a dependent's education future—then there's something called a 529 plan, and with this ESA 529 plan, the money grows tax-free, just like a retirement account, and it's not taxed only if the money that you've put in there is used on educational expenses, and this can be a lot of things that the IRS has opened it up on what we can spend our education expenses on. So it's college tuition, books, living quarters like board and stuff, food, community college, certificate courses, other educational expenses, master's programs, whatever—um—just check with the IRS website for that year whenever you plan because this law changes constantly—but a great way to to plan for retirement and the plan for your future education or for a dependent's future education. And just know if you are a minor or if you have a minor and you're wanting to get him started on a retirement plan, you can do that; you just have to open up a custodial account.

We're going to finish off—we conclude this video with some money-saving tips. I want to leave you just thinking about some saving tips that you can start doing today. All these are very very easy; it's just sometimes you got to change your behavior a little bit. So track expenses—we talked about this in an earlier video too—we'll keep bringing that up—but track expenses, write them down or keep them on on a receipt or keep all your receipts. Sometimes just doing this action can really open up your eyes on—dang, I'm spending a lot of money in XYZ category; maybe I can maybe I can limit that. Start budgeting, of course, mentioned that. Pay yourself by budgeting your savings, so the first thing—the first item that you should put into your budget is how much do you need to save and start putting that into your savings goals. And set goals for your savings, set up direct deposit or your income—if you own your own business or something—to go into your savings first. So don't put it in your checking; automatically put it into your savings first, and then you can pay yourself by transferring that money to your checking if you need to. Meal prep—I can't say this enough; I'm a huge proponent of this—meal prep. That means get on a meal plan that you plan on spending or that you plan on eating for that week. It's usually good for a week, and write down all the ingredients you need, go to the store, get those ingredients for all those meals you're going to make—breakfast, lunch, dinner, snack, whatever—go to the store, only buy those items, and then leave the store. Don't buy anything outside. Make sure you eat before you go to the grocery store; it's a it's kind of a guilty pleasure of mine, going to the store and buying the snack that I don't need. Don't impulse buy. Speaking of that, don't impulse buy. If there's something you're like, oh man, I really want that toy, I really want this thing, I don't really need, you can do the seven-day wait method. Don't buy it immediately; think about it: okay, I'm going to wait seven days. If you still want it by day seven, the odds are you're not going to—by day seven, if you still really want that thing, then buy it. Use some of your want money or something or cut spending in another area and and buy this thing, but usually by that point you forget. Cut out restaurants and bars. Usually the two biggest things that somebody can can can cut out or can—that you have ultimate control over—is how many times you go out to eat or how many times you go out with friends to a bar or whatever. You do go, just get get water and have a good time. Always ask for cash discounts, pay for cash up front. You'll be surprised how many people, especially nowadays with with the with cash being so um tight and and businesses, they don't have cash; they don't have enough to to give out change—um—that you could ask. I mean, the worst they're going to say is no, so go ahead and ask for a cash discount. Reduce try to reduce your power and water usage as much as possible, and I know that's difficult. You know, raise your AC up one more degree or try to go another few days without heat. Don't get sick and don't do anything crazy, but there are ways you can cut it out and you can reduce your power and water usage and help your utility bill. Um, I've seen it drop just in my personal use $50 a month, which is huge, and then I can go out to eat with that money. Find a cheaper cell phone service provider. So don't use Verizon or AT&T; there are so much—there's so many cheaper ones now um with technology expanding that you can use a little cheaper cell phone service. It might not be as fast, and it might not be as um widely networked, but there's still options for you to use that are cheaper. And get creative with your vacations—another word for vacation—get creative with your vacations and your gifts. You know, make something at home for somebody. Some people just—they love—they'll they'll be—they'll remember that gift more; it'll be more special to them if you were to make something and find something a little bit more creative than just buying something off Amazon and sending it to them. You know, go go on hikes, find ways—find some cheap dates that you can do that are going to be a little bit more fun and will help save money.

So that's it for this video. I'm just covering some savings tips, and this—these are just important strategies that we need to do in order for us to get in charge of our savings and get on a good savings plan. Hey, my name's Jack. Today, in this video, I'm going to be covering strategies on how we can manage debt. So first of all, I'm going to quickly go over and just review for a lot of people types of debt and how they work. So the first one is mortgage debt, and that's kind of the probably the biggest one that most of us will ever take unless you get in business. So it's a loan on a property; it's usually going to be a low, fixed-interest, long-term loan; we're talking 15, 20, 30, 40 years, depending on the loan we take out. Credit cards, personal loans, and they'll have variable interest rates. Now notice I put variable and then fixed interest rate here. So fixed interest will stay the same no matter what; well, variable—think of change—variable is another word for change. So the the interest rate can change depending on the number of factors, economic factors or or your own choices. And usually credit cards are lumped in with the most—considered the most dangerous consumer debt; they have the highest interest rate compared to many other loans. Personal loans are small loan amounts, usually not more than $10,000, and they can be used for various reasons. Uh, typically these will come with higher interest rates, but not as high as credit cards, and these are also considered installment loans since you'll get the whole lump sum of how much you how how much ever you want—the whole balance—and then you'll pay that installment over time. Auto loans—also an installment loan—loans used for car—car buying, usually resulting in resulting in short- to medium-term loans, so no more than 10 years, usually fewer than 10 years. Interest rates are usually fixed, and I put usually because sometimes used car dealerships—I've seen it before—where they'll have variable interest rates. Run away from those if you happen upon them. Uh, in that repayment process, interest rates are going to be fixed, and they're usually lower than personal and credit cards. Payday loans—these are probably—you can make an argument that they are equivalent in dangerous level as credit cards—payday loans; they're also short-term loans.

In fact, they're really short-term loans. They're usually only a couple of months of repayments, um, with high interest rates. And this is what happens usually when you take a loan from a payday lender: you, you basically surrender your paycheck until that loan is paid off plus interest. These go from—I've seen them at 10%, I've seen them at 15% before—for um, an interest that you owe, and they'll hold on to your paycheck. You won't get any of it until the loan is has been satisfied; the loan payment has been satisfi- satisfied.

Similar to title pawns, when they take a something as collateral like your car. Student loans—I'm going to talk more about in a little bit—student loans have lower interest rates; they're usually long-term loans, depending on how you have them structured. Uh, people can pay for education, so you can pay for your four-year degree; you can pay for your Masters; you can pay for Community College; you can pay for anything using that student loan money uh, that's related to to your education, like food and and books, uh, computers, whatever any other supplies you might need. Often these loans are heavily regulated by state and federal government, so uh, usually small businesses can't; private loans still can, but it's it's difficult to to take advantage of. What's nice about student loans is you don't have to pay them until you're done with college or done with with whatever activity you got the loan for. Then you start paying them.

So loans are important to understand when it comes to credit scores. You need—when you want to understand loans, you have to understand credit scores first. So credit scores will affect our interest rate on our loans. Usually the higher the score, the lower the interest we we get; the more favorable terms, basically. The better score, favorable terms; lower score, not so good terms, which results in higher interest. And credit scores are determined by calculating five different categories. You can see them there; payment history being the biggest one. Pay history and credit usage are the two biggest ones, and it's a mix of the other categories down here. Credit scores that can range from—it depends; there's three big credit reporting companies—but it it ranges from about 850 being the best to 250 or lower, you know, being being the worst.

So if you want to know how to quickly improve your credit score, I put some tips here, and there are some more advanced tips so you can read and study about later, so you're you can you need to review your credit report and see your total debt picture. You need to to see how much you owe; you need to to take notice and acknowledge, like, "This is how much I owe; this is how much debt I have." So then you can start making plans to to get rid of it. Organize all your bills and loans. So I'm going to talk more about snowball versus Avalanche method later on, but make sure you have a plan for all these bills and loans and how you're going to pay them off, and also which ones are the most damaging to you right now. You want to aim for using 30% of your credit line. So if you're using way more than that, try to narrow that down; if you're only using like 5%, maybe bump that up, pay that off, but use—you want to use about 30% of your total overall credit line. Eliminate or greatly limit any credit or any any new credit, any in any credit limit. So if you know something bumped up in limit, bring it down. If you are thinking about applying for new credit, don't do it. You can use thin credit line credit file tactics like Experian boost and Ultra FICO. What this means basically is, even if your credit score is bad and you're using all types of credit, you can still use this these methods because they—those products, and there's other ones out there—they'll they'll think that a thin credit file basically is is you don't have much credit history; you don't you haven't used many loans; you haven't taken out many credit cards. And Experian boost and Ultra FICO and a few others, they'll use other things to help bump your credit score up. Make sure you handle delinquent default accounts first. So this is why it's important to organize your bills and loans because you want to handle your most dangerous loans first and try to settle those debts; call them up; try to get it resolved as quickly as possible. And then consolidate debt. I'm gonna talk about this more later on too, but consolidate your debt into one account or as many as you can, at least into one managing account. And then finally, I'm going to talk more about this too, and I'm gonna keep bringing it up because it's I think it's so important: monitor and budget your process. Make sure you set checkpoints, goals; celebrate some small wins too, if you can. You know, you paid half a half of a a loan off, make sure you celebrate it, and make sure you always budget.

This another important factor we need to know is amortization schedule. So what that is is a loan repayment schedule that is paid by installments, and how that works is these installments—monthly payments—part of that payment will go to the principal, and part of it goes to interest. Now, usually in amortization schedules, usually the first few payments will will focus more on the interest and less on the principal. But what's important to know is the principal is the amount of the loan you took. So you get a $50,000 loan out, that becomes the principal, and the interest is whatever the bank or financial institution you got the loan from charges on it. Most of the amortization payments and the installments, most of that's going to go to the pay off the interest first, and then it'll pay just a little bit towards the principal. But this changes over time as you start paying more and more. If you—this is why it's so important to understand amorz—because if you can make smaller payments, even if it's only 50 bucks a month or 100 bucks a month, that money—that extra money—can go to pay off the principal, which and return lowers the interest, so you're saving a lot of money over time.

And one of the most important things, probably the biggest pain point for many Americans, is tackling college debt and knowing how to handle it. So I'm gonna give you a few strategies in on doing that, and this can also apply to other loans as well. So first, consolidate. Consolidate means there's consolidation loan companies out there; you can lump all your loans into one account, and you can negotiate for a lower interest rate. But beware when you do this; make sure you talk to the person or get some advice on this because further advice than just my video here because uh, there's a lot of restrictions here; there might be some fees built into this too. They only allow some of these companies; they only allow certain people with certain income levels or with certain credit scores before they do this. But it can help because instead of paying like four or five loans in four or five different places, they can bring it all together into one. One loan. Apply for government relief programs or debt forgiveness, and find an employer or opportunity that may offer repayment program. So there's there's some jobs that might help pay, and there's some industries—if you work in that industry, like school teachers or some states—make sure you check with the state or some federal um, business federal agencies, departments; they will offer repayment if you work there for five or 10 years; they'll help pay and get rid of your college debt. And of course, budget—can't say it enough. Focus any extra income on the debt; pick a debt payment strategy; stick to it. With consolidation, we can also talk about restructuring loans. So these—I would make sure—I'm just showing you some different restructuring types, but all these you'll need to run by a lawyer or a CPA—your accountant—before you get any further in considering these. So just quickly, consolidation is a way to do that; refinancing; a court restructure; bankruptcy. Same thing; these are court cases though; these are—I would say these ones right here are the most dramatic ones. So if you are, you know, in a desperate financial situation, then consider these because they are a long, costly, and emotionally draining process. Always ask for settlements and reductions. So for these two, just pretend that you have a big medical bill; you can call the hospital; you had something done; it cost $40,000; you only have $20,000; you settle with them like, "Hey, this is what I got; you either take it or leave it, or you're not going to see any money." Um, and sometimes—and a lot of times, especially credit card companies, I've noticed they'll accept the settlement so they can just close that account and move on.

So paying off debt quickly—we talked about how that we can build our credit score and the and these go hand-in-hand—paying off debt quickly and saving an interest rate. First thing, again, once again, review; get on a budget; paying a little bit where you can. So pay a little bit extra where you can; this will this will help pay down that principal, which in turn lowers your interest; that helps save on interest. Try lowering your bills; find ways to to lower your bills; find if it if it's something that you can't afford or you're never going to get out, then see if you can lower that bill. Increase your income. So this is always important; more money will always help, right? Increase your income; get a second job; ask for a raise; start a business; all that extra income can go towards paying off that debt. And then seek debt relief, you know, again I mentioned that earlier; seek debt relief where you can with any government agency or business that you're a part of.

And lastly, I'm going to talk about the importance of getting on a personal debt repayment plan. So it's kind of like a budget; in fact, they go together. You you have to do one and the other. So you want to list all of your debts and loans; get them all; get all the account information; get the contact information. Then you want to organize this, and there's two big ways that you can organize this. One's called the snowball method, which means you're paying—you're organizing and paying your your loans from the smallest loan principal—smallest balance—to the largest balance. So the good news about this is you get the psychological wins; you start paying those small loans off and knocking them out quick, and then you move on to the next loan; then do it again; do it again; you get the small wins. Whereas the other method, the Avalanche method, you're going to list them from highest interest rate to the lowest rates—to the lower rates. Mathematically, the Avalanche one makes sense. So if you know if you're a principled person and you're and you're disciplined, Avalanche could is usually the—mathematically—is the best one, but psychologically and emotionally, snowball's the best one. So make sure you understand, you know, which one's the best; have somebody with you to to go through that. Uh, either one's good though; just choose one and go through it and organize your debts from whichever method you choose. Find areas of your budget to cut to focus on loans. So if you can cut out spending on the weekend, if you can cut out going out with your friends for a weekend, or if you can cut out a one extra trip that you take a year, use those areas of your budget to focus on paying off that debt. And then find ways to make extra payments. So once you've done that, then you can make those extra payments, and I can't express this enough how much you know, even $50, even $100 can change a month, um, it can change the course; not only will you pay less over time if you can do that, but you'll also be paying—um—you you'll knock out that debt quicker, which means you'll be out of debt quicker, so saving yourself time and emotional stress. Uh, focus on focus on the most damaging debt first. So if one of these methods just doesn't make sense to you and you just you have one that's like such a glaring loan or glaring debt that's just eating away, focus on that one first, and then focus on the next one and move from there. And then finally, to end this lesson, build up—you need to make sure you build up an emergency savings fund. And I kind of put these in order, but you could perhaps consider putting emergency fund first; build up an emergency savings before you start doing this, um, and this this just—I put this at the end because kind of an optional slash you need to do it, but I put it at the end because everybody's personal life—personal finances—are different. Just make sure that you have an emergency savings because something can happen on your debt payoff journey, so make sure that you do this so that you can protect you and your family while you're trying to uh, create this personal debt repayment plan.

Hey everyone, my name is Jack Warner. In this video, I'm going to be covering the basics of using our investments to help grow wealth, and in this video series—the other videos after this video—I'm going to get into more details and strategies and covering different assets that can help us grow wealth. But this is just laying the the outline, the basics of why and how we can use investments to grow wealth.

So getting started, I have to bring it back to some of our earlier lessons and videos. We discussed through budgeting and saving, and we can use extra money from budgeting—saving—budgeting and saving to help us reach our goals. So a lot of this might be review, but saving money by cutting out wasteful spending and budgeting, and you have to think about it this way: I can save money instead of instead of going out to eat when I don't need to because I already have food at the house; I can use that money and invest it and make money off that. So that's the way we have to change our mindset is: where can I—it doesn't have to be like, "Oh, I could save so much; I can I can live in my car and not have a house and not have rent and invest that." Now I've heard of some people doing that, you know, that's to each their own at that point, but you want to be—you want to have a fine balance. There are some ways we can save; we can budget, and we can save; we can cut wasteful spending; use that savings to plow right into our investments; and budgeting and making a plan for your money, it'll help you achieve goals; it'll help us get out of debt; it'll help us save money; and of course, our goal for this video—we're going to be focusing on—it can help us invest more money. So if—especially if we get out of debt—if we're getting out of debt, there's no more debt payments; we can instead—we can use those payments that we're paying off debt to put right into our investments. We also can take advantage of tax-advantaged accounts—it's a mouthful there—but we can take advantage of tax-advantaged accounts. So where can we—first of all, where can we find assets and investments to um, that we don't have to worry about paying taxes in the future, or where can we lower our tax-deductible income? So there's different ones here. Prioritize putting money into investing accounts that have big tax advantages. So there again, there's different ones; there's pre-tax, post-tax; less money towards taxes, and we can put that money more towards wealth and other goals. So different examples here, like your 401k—tax advantage—your Roth IRA—which this 401k is your pre-tax income—where Roth IRA, you already been taxed on it, but you never have to get taxed on it again. Traditional IRAs, same as 401ks; health savings accounts. So you can put money in a health savings account; that money grows; that money is first of all tax uh, deducted, so how much you put towards the HSA is tax deductible; any expenses—medical expenses that are qualified—are tax free, so any withdrawals you make, any growth in that account is tax-free, so that's like triple tax advantage there. And then your educational savings accounts, and there's various ones there. You can check out our other videos and other investment series to get a breakdown of each one of these, but all of these share a common trait, and that's they—less money goes towards taxes; more money goes towards your wealth. Now there—all these also have qualifications and limits and different regulations that you'll need to understand before you get involved with them, but you need to make sure you're maximizing—maximizing your investments in these accounts first, and then we can make our money—understand—you can make your money work for you; don't let it take control of you; you control your money, and you want to—you use this money to create more opportunities for yourself and for others. So invest in assets that hold value and give a decent return on investment, also known as ROI. So you don't want to spend money on things, right? We do have to spend money on food; we do have to spend money on on other stuff. I have a friend who wasn't in the right—wasn't trained in financial—was never educated—most Americans aren't; we weren't trained in in financial basics in high school or college. My friend went went out and spent a ton of money on the credit card—jet skis, toys, guns—just just a bunch of crap that he didn't need, and now he's in—he's facing all this debt. And instead of investing in assets, he bought things that he barely used, and a lot of Americans do this; I mean, it's—they'll buy toys that don't hold value; they'll buy new trucks that don't really hold much value; they'll buy boats that they use three times a year, and that's not—you're not going to get a return on investment on those things. Now you can—you could rent them out; you can start a business; you know, you—there are ways to do it, but you want to make sure you're focusing on assets that hold value and give a decent return on investment. Don't invest things—don't invest in things you do not feel comfortable with or you don't know. You know, invest—if a friend's asking for, "Hey, give me $10,000 so we can start this business," you probably won't feel comfortable with that; that's probably not a good financial decision for you, so move on from that; find another opportunity. Understand that wealth takes time too. This is not an overnight thing; very rare—very, very rare—like 0.001% of people that become wealthy in less than a year, let alone a couple of years. This is going to take a long time of letting your money work for you—compounding interest—allowing that to work and allowing your wealth to build and build and build and taking advantage of those tax-advantage accounts. We also need to diversify if we want our investments to to help us grow wealth; we need to diver—to diversify. So those—we get that saying, "Don't put all your eggs in one basket." You want to split your investments into different areas. So I don't want to put it all in Tesla, even though Tesla—well, it depends on on how you view stocks—but Tesla might be a successful company and it might do good, but they go through swings; they go through some crazy swings—um, ups and downs for sure. So you want to make sure you're splitting your investments; don't put it all in one car or don't even put it in one—don't put it in all auto industry; you know, split it up; put some in tech; put some in in agriculture; put some in pharmaceuticals, um, so you make sure you're splitting your investments up and and then don't focus on the stock market too; put some money in real estate; put some money in a business that you're starting or whatever. Have a healthy balance of higher-risk investments. So you want to—you want to make sure that you understand your risk assessment first—your risk tolerance—and then you want to have a healthy balance. So you need higher-risk investments and low-risk conservative investments when you are investing um, to make sure that high-risk investments, they're going to help you grow more money, where low-risk investments are going to help you with that conservative piece where you where you can handle more risk, but also it won't have why crazy volatile swings um, in value. And make sure to keep a percentage of your investment cash as cash. So if you have an investment account, say you put $50,000 in it, you invest $25,000 of it in in a year or two, um, so you have $25,000 left over in cash; keep that there for a little bit; put more money into it, and then you can invest more, but you always want to make sure you have some—it doesn't have to be 50%; that's just an easy math example for me—but make sure you keep a certain…

Hi everyone, welcome to Principles of Investing. I'm Greg Kilpack, a senior investment strategist and trainer currently working for Personify. In lesson one, we're going to talk about market cycles. Market cycles are critical to understand because they help investors know when it's the right time to buy and sell stocks over the short term. All stocks move up and down, and it's really hard to tell what it's going to do next, but over longer periods of time, the stock market moves in fairly predictable cycles. So if you understand how the market moves during these cycles, you can anticipate with a pretty good degree of accuracy what's going to happen next. I'll show you what I mean throughout this lesson.

Before we go any further, let's cover the disclaimer. These lessons are for educational purposes only. Anything discussed is not to be considered a recommendation or solicitation to buy or sell any security. You are responsible for your own trading decisions. Always do your own research before investing in any securities. Please pause this video and read the rest of the disclaimer.

It turns out that stocks move up and down together, just like a school of fish. When the market is going up, almost all stocks go up with it. Well, why is that? It's because when the economy is expanding, most of the companies in the New York Stock Exchange, well, they're going to expand with it. Almost all the companies on the New York Stock Exchange are big, established companies; they've been around a long time and they have proven business models. And so, as long as the economy is growing, which it generally does over time, well, the market will go up and almost all stocks will go up with it. Likewise, when the market is going down over time in a bear market, well, almost all stocks will go down. In fact, over 95% of stocks will go down when the market is going down over a period of time. So that's important that you need to know.

It turns out that when you buy a stock is just as important as which stock you buy, because over time, if you buy and sell at the wrong time, you can lose money regardless of which stock that you buy. So I'm going to show you a chart in just a moment of the Dow Jones Industrial Average, but you need to know what that is. It is an average of 30 big stocks that are on the New York Stock Exchange, companies that you've heard of like United Health Group, Goldman Sachs, Home Depot, Microsoft, McDonald's, and so forth. You've heard of just about all these companies; they're all huge companies that have been around for a long time and they have proven business models. So as the economy grows, almost all of these companies will grow with it, and their stock prices will go up over time. And likewise, when a bear market comes along, they'll all go down pretty much together.

So here's the Dow Jones Industrial Average over time. This is a chart going back 15 years; it's currently August 2022. What we see is this bull market lasting 13 years or so, and we see the previous bear market. There are some things that you need to see about this and need to know. The goal of investing is to stay invested throughout a bull market and then step aside before a bear market comes along where prices get hit really hard. I'm not concerned about the little losses that happen right there throughout a normal year in the stock market. Stocks pull back maybe anywhere from 5 to 15% on any given year. Stocks don't go straight up; they bounce around; they go up and down and up and down. So I'm not too concerned about these little moves within a year, but I am concerned about a bear market where stocks will drop over a year and a half to three-year period as much as 50% or more. That's a really harrowing experience if you've ever gone through that. When the market goes down like that, we want to step aside for two reasons. First off, of course, is the financial loss, but even worse than that is the time that's wasted. If you had not sold your stock somewhere up here at the top in 2007 and you had held on through this entire time, it would have taken you six years to get back to break even, all the way over here to 2013. So if you're in retirement or you just need the money, well, that's a long six years to wait. If you have to have the money right now, you may be forced to sell your stocks down here at lower prices, and you don't want to do that. So from the high in 2007, $100,000 would turn into $445,000 here at the low, and that's—that again, I'm telling you, that's not a fun experience; you don't want to go through that. So I'm not concerned about the little fluctuations, but I want to avoid these big bear markets, and they come about once or sometimes twice a decade. Now, we really didn't get one at all from 2009 to 2021. Now, I'm going to talk about this in just a moment. I'm not counting that in my figures here, and the reason for that long bull market—longest bull market in US history—is because the government and the Federal Reserve pumped so much money into the economy that it kept going up over time longer than it really should have.

So what happened when the pandemic started in the spring of 2020? When they started to have the lockdowns and so forth, social isolation, the market tumbled 38% in a little over a month; it was like five or six weeks. And the government, of course, responded to that out of what overdue caution you might say by dumping even more and more money into the economy, which later caused inflation in 2022. In 2021, when the Federal Reserve saw that, of course, it drove stock prices up for two years, but because of the inflation, they had to raise interest rates, and they had to stop the quantitative easing or the stimulus. In fact, they're starting to roll it back now. It's August 2022, and they're in the process of doing that. We've had several interest rate increases this year, and we're going to have more into next year. Well, that's really going to slow down the economy, and that's going to cause the market to drop further. The thing you need to know is that within certain boundaries, the Federal Reserve and the US government controls where the stock market goes, and that's exactly what they're doing, even to the point of manipulation. They're putting so much money into the economy and into the markets by buying corporate bonds, which they've never done before. All of these things drove the market up to quite high prices, very high prices, and now we have to have a correction to make up for that, and that's going to be painful over the next couple of years. Just be aware of that. So we need to understand more about how these bear markets work.

In the last bear market in the chart I just showed you, the 2008 bear market, the stock market fell 55% over about a year and a half. That's pretty typical. The previous bear market, the S&P 500 and the Dow Jones Industrial Average both dropped 45% over a little bit under three years, while the NASDAQ actually dropped 70% with the tech-heavy NASDAQ back in the crash of '29 and the Great Depression. Stocks fell 90% over less than three years. Now, the economy was terrible throughout the 1930s, but the stock market stopped going down within three years. I have never seen a bear market last longer than three years. So what that means is, from the high that happened in late 2021, if you fast forward three years, it's probably going to be time to start buying into the market by then. That's just something to be aware of that'll help you time the markets. Now, depending on how high the market has gone, we have to correct for that. The reason why the market crashed in 1929, 90%, is because it had been so inflated, and it was a much smaller US economy at the time. In other words, it was a bigger bubble, and it popped. So the bubble is popping now in 2022, and I would suspect we will see at least a 50% decline in the markets. That's my prediction, because what goes up too high must be corrected in equal measure.

Let's go back to the chart for a second. So the high came in at over 35,000 on the Dow Jones Industrial Average. If we have a 50% pullback, where will that take stocks? It'll take us all the way down to about here, about 18,000. So what that means is, after only eight months of being in this bear market, it's very likely that we have more to come, because most bear markets last at least a year and a half. The only reason this one only lasted a month was because, of course, the Federal Reserve came in and dumped a whole bunch of money into the economy. That's not happening right now; they're raising interest rates and slowing things down. So that means we'll probably have a normal bear market where stocks drop at least 50% over one and a half to three years. That's a pretty normal prediction. There's nothing special going on about this particular bear market at this time. I know that because the government has dumped so much money into the economy that the economy is holding out pretty well so far, but we have worse to come before it's all over. Just be aware of that. The—I hate to be the messenger of bad news, but the worst is yet to come.

Okay, so here's what I want you to remember from this lesson. First off, over time, as we go through a bull market or a bear market, if stocks move up or down over months and years, over 95% of stocks will move in the same direction. So if the market is going up, like it usually does, almost all stocks are moving in the same direction. And likewise, when the market is going down, like it is right now. Also, bull markets last typically five to eight years, and bear markets last a year and a half to three years on average. However, we have to watch the government and the Federal Reserve with how much they're stimulating the economy and how much Congress is spending to determine how that's going to affect the markets. After all these things happen, we watch how the market responds to what the government is doing. So the goal of investing is to stay in the market as long as the market is going up, which it does most of the time, and then sell before a bear market comes along. In future videos, I'm going to teach you the signs that we're near the bottom or that we're near the end of a bear market or at the beginning of a bear market, that helps you to time when it's time to buy and sell your stock; these cycles. So going back to the chart, if we had sold somewhere at the top of 2007, at the high there, but somewhere down here—we don't have to be exactly right; we don't have to time the market perfectly to make money—we just have to step aside so that we miss most of this selloff. It's all we have to do to really take care of ourselves and protect our money. When the market's going down like it is right now, it doesn't hurt to be completely out of the market and in cash for a couple of years. Don't listen to your financial advisor when they say always stay in the market. That's if you want to be a buy-and-hold investor and you're willing to suffer through these painful pullbacks and wait six years for the market to come back, well, then you can follow that advice, but most people get scared off and sell at the bottom when they should be buying. It's better to sell at the top early and then get back in when you're sure the bear market is over, even if you wait all the way to 2010 or 2011, even so. That's what you need to know. We'll dive more into how to recognize when we're at the top and the bottom of the markets in future videos. Until then, good luck in your investing.

Hey, my name is Jack, and today in this lesson, I'm going to be going over how to create a financial plan, plan, and how to start getting on a budget, creating goals, and kind of making a purpose for your financial plan, for your strategies that you want to use to start getting ahead financially. So the road map for our financial plan that I recommend is first—the first step—I'm going to go through eight different steps that you should—plans that you should start looking into and researching and putting some work into in order to get ahead of your financial journey here. So the first one is get on a budget, and the second one, create an emergency fund. And some of these, they can tie in together. So really, you could combine step one and two, both of those things, into step one, but definitely get on a budget. So you create a plan with your money, create an emergency fund to prepare for any emergencies. Step three here, plan to eliminate or limit debt. Step four, start setting financial goals. Step five, kind of with—again, another one of those steps we can kind of combine depending on your lifestyle and where you're at in your financial situation—set financial goals, invest for retirement. Step six, begin paying off the home or collecting a sizable down payment for a house if you plan on buying. Step seven, grow wealth and invest in—invest outside of retirement. So we'll talk about things like investing in real estate and such. And step eight, talk with a financial planner or advisor if you have all this and you're—and you're ready to go, but you just need that extra push or that extra step, that extra advice, you might need to consider talking to a professional about this.

So I'm going to break down—in this video, I'm going to break down all these steps in our road map to creating my financial plan. So first one, get on a budget; create a plan with your money. I put some other videos out about how to create a budget and different methods to use to start a budget. So make sure that whatever method you choose, you stick with it. Um, but to start, if you just need somewhere to start, you need to write down everything you spent money on, starting today, and do this for an entire month, or you can look at your expenses from last month and write those down. So you can print off your credit card statement or your bank statement, whatever you use to start tracking your expenses, whatever you use to spend money on or with or through, make sure you have that account information so you can start. The first part of any budgeting is tracking your expenses, so that's the first thing you need to do. The second step, create an emergency fund. So once you start getting that budget underway, you need to make sure you use this as a budget item. You need to start building an emergency fund. You're not going to touch this money; you're going to put it into a savings account that is very strict and limited because this is only for emergency purposes. So some examples of this, and I put some—I just put some random—not random, but just suggested amounts for each stage of life that we might find ourselves in. So us high schoolers, if you're 17, 18 years old, you might look to put $500 in. College students, it goes up a little bit. Single adult, you know, you don't have a family, and then married, starting family, somewhere around two to 5,000. This all depends though on your comfort level and how you—and how you—you want to—how much comfort you want to create for yourself. Basically, this needs to be built up upon later on; this is just what's known as a starter emergency fund, though. Later on, you need to start including three to six months of living expenses into this budget plan. Or step three, plan to eliminate or limit debt. So the first part here is eliminate. We want to make sure we are not taking on any more consumer debt. So we're not going out and buying a car; we're not opening up another credit card line; we're not taking another line of credit from PayPal, whatever that is. Then we need to begin to start paying off that debt. So I've—I've introduced different methods such as a snowball method. Just to summarize what that is, you're starting with your smallest loan balance first and paying that off, and then you're moving up to your bigger ones. So you rank them from smallest to biggest balance, or the avalanche method, where you're ranking your debts that you owe, the loans that you owe, from the highest interest rate to the lowest interest rate. Both of them are solid methods; snowball is usually the more popular one because of the psychological effect of, "Dang, I—"

Know I checked off that smaller loan amount. I'm moved on to the next one where Avalanche is a little bit more for people who can handle the math and they don't need the emotional check.

Plan four: Set financial goals. So whatever this might be, I show a picture here of a car, a house, bike, you know, teddy bear—different, different stages of life here—but set financial goals. If you want to start a business, you might need to get different; you're you're GNA—your financial plan is going to look a little different than someone who's wanting just to buy a house, or someone that's wanting to move out of their parents' basement, or somebody that wants to just needs a car, or someone who wants to travel more. All your goals are going to look a little different, and you need to start setting these out too and putting a quantify—I'm first quantifying—so how much is it going to cost? How much time is it going to take to get there? Reasonable time and start putting these from, you know, short, mid-to long-term goals.

Step five: Invest for retirement. Then this kind of goes with your step four, creating a financial plan, but you want to start investing for retirement. Most financial experts say aim for 10 to 15%, regardless of your goal, aim for 10 to 15% of your take-home pay to invest. And other ways we can get started through 401Ks or other employment retirement plans. You want to be able to max these out—max all retirement plans—you know, 403Bs, 401Ks, whatever—max them out. And of course, you you have traditional um, IAs or Roth IRAs; you want to make sure you're maxing those out too.

Number six, step six in our financial plan: Begin paying off your home. If you have a home, if not, collect the sizable down payment. Most financial experts, they want to say they want to claim around 20% of the total cost of the house. So make sure you you can get to 20%; if not, there's other other ways too. I know it's really difficult nowadays too to build up to that big payment. And if you can, of course, you want to put extra money per month—even $50—you can put this in the calculators too online. If you look up mortgage calculator and put your mortgage in and you just put in um, add extra payment $50 or $100 per month, this can this can save so much on your interest rate and cut down the the time it takes to get out of debt outside of retirement.

So say you have your retirement maxed out, you have your goals set, you're budgeting, you're doing awesome. Now you can you can grow wealth and invest outside of retirement. And there's different ways; there's thousands of ways to do this. If retirement accounts are maxed out, there are other ways we can invest our money—start building up your college fund for your children if you have them, or your own college fund—maybe you want to go get your Master's or PhD or something—invest in an existing business or start your own business, or invest in other people's business ideas, or all sorts of crowdfunding sources out there. Consider hiring a financial advisor. Invest in individual accounts for funds. So you want to make sure though that this is money that you can afford to lose. This is not retirement money; this isn't your emergency fund; this isn't your grocery budget. This is money that it's going to be usually it's GNA be less than 5% of your total investment money—so not even your income, just 5% of the money that that you can afford to invest. Then take that percentage and you know something that you're okay with losing, and these would be considered considered taxable accounts, of course, outside of retirement. Invest in real estate and do some home flipping, rentals, Airbnbs, whatever.

And the last step to to help get our plan in motion, sometimes it's just that accountability factor that we need. Talk to a financial advisor or financial planner, or wealth manager, or financial consultant; there's so many different names they have, but if you Google that in your local area, you'll find a decent one. You definitely want to find one that's that's going to that has the heart of a teacher; that's going to teach you how to what they're investing in and what their plan is for you and your money and your family's wealth, rather than just, "Oh, I'm gonna take a percentage of this and we're going to make profit off of it."

So those are the eight steps to creating a financial plan. So I'm going to go back through and show you the all eight steps just to review and just to so you can see the the big picture. It's the eight steps, the roadmap to get on my financial plan. And again, a lot of these are suggested in order; they're not they're definitely—if you want to get on a good financial plan, these are a requirement—but and some of these you can kind of switch the order, or you can merge them into one step if needed. But definitely the last part here, I I definitely want to make sure that we understand that talking to a financial planner or even a financial coach can help you kind of solidify these and put it into writing and start making steps in order for you to create a financial plan for your family. Get started on that today and start making yourself financially free.

Hey, my name is Jack. In this video, we're going to be covering how insurance works and just a basic overview of it. We're not going to be breaking down to to the complexities that insurance usually is tied to. When we're doing in this video series, we're going to do a quick miniseries of four videos just breaking down the most common or most popular—uh, I shouldn't say popular and insurance in the same sentence—the most used, most commonly used insurance types and some of the concepts that you need to know so you can factor that into your financial budget.

So first of all, connecting it to finances, how do we look at insurance? And we need to look at it as risk management. So how do we manage risk? If we are if we are risk-averse people, then we need to make sure we need more insurance and we need more coverage and protections over certain assets and things that we value. If we're a little riskier and we like taking more risks, probably still need insurance, but might not might not um need as much as insurance to somebody who's risk-averse. So regardless if you're if you like risk or if you don't like risk, insurance is used to hedge against loss; that's the main purpose of it. And hedge in this in this phrase means to combat loss or to balance out a loss. So loss can be a financial loss; it could be if you own a business or something; it could be litigation even if you if you don't own a business and you're just doing activities on your property; it can prevent um unpronounced and unknowing litigation, any other kind of damages, injury to a person, loss of value of your property, whatever it might be; it helps protect against your asset. So if your asset value goes down, insurance is there to help you out. It helps protect wealth, of course, and policies. This can be frustrating; insurance is is a frustrating everything—health insurance, car insurance, property, business—it's all extremely difficult, especially if you're dealing with a salesperson; it can be it can give you a headache uh, but overall, once you have that established, it can give you a peace of mind. And we have to understand that insurance is a contract; it's a an agreement between us, the insurer, and the insuring company, whatever it might be. So when you sign insurance policy, you are agreeing to its terms and vice versa; the company is agreeing to its term, so it's becomes contract law, which can be taken up into court that way they can make sure that these contracts are enforceable. Likewise, the insurance company agrees to cover the losses as agreed upon in the contract. And we need to make sure that because this is a contract that means it's a it's an agreement between two or more parties; we need to recognize insurance as a business model. So do that first, and I'll help—a lot of people kind of put like banks and insurance into different categories—banks and insurance companies are businesses. We pay into the policies to protect that; that's the service or product that they are providing; they're giving us coverage for whatever—health, car, home, business—whatever. But the insurance companies have to make money; they have to profit in order to be a successful company. So we need to understand that that's how companies—that's how insurance companies work; they have to make money in order to profit in order to stay in business. So though it's well it's all well and good that they might say, "Oh, you know, we care about people; we care about your property; we care about small businesses," that's that's awesome, but their bottom line is they have to profit. And some insurances are required by law depending on the state you live in. So the only bad thing about this—this can tighten our scope in the market of what we're looking for because most in almost every state—I think there's a few states that aren't—but in almost every state it's required by law to have auto insurance or some kind of degree of auto insurance. So then it really tightens down you know what kind of insurance you can get; it kind of hurts the competition a little bit; it gives us very little choice.

So some need-to-knows with insurance, and we're going to be expanding on some of these points in later videos as well. But the premium, the premium you pay is your monthly cost of the policy. So if you hear an insurance agent or salesperson or financial advisor, whatever, they're talking about your monthly premiums, that's just your the cost that you pay to be a member of that policy in in order to be covered. If you don't pay your premiums, you don't get covered. Coverage is how much the company plans on covering and what they plan on covering. So if you're buying home insurance, then you will the the company, the home insurance company, will plan on covering certain damages that could or could not—may not occur—depends on the electives that you select—will cover the house and any damages that it might incur, and then how much they plan on covering it. So usually they cap it off at a limit. Co-payment is the percentage you pay and the percentage the insurance pays. This usually is tied with health insurance or maybe even dental insurance. So you pay a certain percentage; usually you see like 80/20, 90/10, 60/40 splits, something like that. So you pay you know all the way up to to 20%; the company covers the other 80% of each visit or each product or whatever it is that you you're buying. Deductible is important because this is a set amount that you as the insured person has to pay before cash—pay in cash—out of pocket basically before insurance can kick in. So if you have a high deductible, just know that you have to reach that deductible before insurance will even come in and help. So if you have a $5,000 health insurance policy deductible, the the health insurance company won't help until you've paid that total $5,000. So the rest of it's going to be out of out of pocket. Policy limit—policy limit—max coverage of the insurance company will pay for. I mentioned that in the coverage too, and I might be mentioning there, but uh, health insurance they might only cover $500,000 for that year; car insurance they might only cover $100,000. So make sure you understand you know where is the policy limit, how much is capped off uh before you get involved with a policy that you may need more—you may have you might have to spend more than what the limit is—and you can always change that, of course. The higher policy limit, usually the more expensive your premiums. And this kind of goes hand-in-hand here—premiums and deductibles—the higher premiums you pay, the lower deductible you have to pay, and vice versa—the higher deductible you have, the lower premium. So just understand the balances of how it works, how it generally works in the insurance um policy market.

Hey, my name's Jack Warner, and in this video series I'm going to be covering how taxes work, how income taxes are calculated, what you can do to lower your taxable income, and we'll discuss other things like credit deductions and property taxes and consumption tax. So this video we're going to mostly focus on the grand scheme of taxes—you know, why do we even have taxes, how do they work, where do they go, etc. So the first thing I want to cover is why taxes. And some of you probably know like the government taxes us, but what do they do with it after? Why do they tax us? Well, the first thing is the government needs money, and that when I say government in this in this video I'm meaning everything from local, state to federal levels of government; they need money to function and and pay for public goods and services. They got to pay for schools; they got to pay for our defense; they got to pay for law enforcement. So they need money, and taxes are the best way to get money—um, it's actually the one of the 95 plus percent—we'll cover that later—but 95 plus percent of the revenue comes from taxes. Taxes are the largest source of revenue. And other ways the government can get money is through fees, donations, customs tariffs, which is another tax, so basically a tax, and some other sources. They can sell—they can government sell stuff too; they can sell like uh the national park sells parking passes or uh park passes—um, game and wildlife state agencies they'll sell hunting licenses and stuff like that. Income tax, corporate tax, and Social Security, Medicare tax make up about 95% of the government's revenue. So whenever you look at your pay, your pay stub, and you see all the different things that were taken out, the four biggest ones—corporate tax won't be on your personal income tax—but these other ones will; you'll see those going to the government um being taken out by state and federal government, whereas if you own a corporation, you'll you know you'll get hit with the corporate tax too.

So what does the government do with these taxes? Now they have this money; what exactly do they do with it? And it's important to to see—it's important to—this is just the federal government. So you can you can get more uh transparency if you if you go to your local government or to your state government and see where they spend their money um, but this is just—I was I was easily able to find a data—and most of our taxes go to federal government functions. So when we see the breakdown of of the programs that our government spending—and this is just as of fiscal year 2022; this was the budget for 2022—we can look at the trillions and billions of dollars that goes to these to these programs, and we can also look at agencies. So I click on the agency tab; you can see the different agencies that are also spending the most money. So you have Health and Human Services, which is makes sense because Medicare and Social Security, of course, then you have your Treasury; a lot of that a big chunk of that is the IRS, and Department of Defense, military programs, and so on and so forth. So they need obviously they need money; government needs money to hire people; they need money to to buy goods and services to help these people do their jobs.

So how does this work? How does the how do the government start to to use our to take our taxes? I guess we could say it that way, put it bluntly—how can they take our money? Um, taxes are created by law. So Congress—it has to be passed by Congress; it can't be something the president makes up. So a lot of people will put will blame Trump or blame Obama or blame Biden or whatever Bush about the tax rates, but it's written in the Constitution; anything to do with taxes, money for instance, has to has to start in a House of Representatives; it's got to be passed by Congress. So tax taxes are created by the the Congress, the legislation. So it could be—I should mention—it can also be created in your state house, and then they're enforced by government agencies. So they're enforced by things like the IRS. And speaking of the IRS, the Internal Revenue Service, they are the chief tax enforcement agency in the United States. They're the ones that can audit or investigate whether or not you paid enough in taxes; they're the ones that that issue and confirm the tax return that you might receive. So they are the number one tax policy agency. Taxes are generally withheld. So we have a withheld program uh, especially if you're a W2 employee. This means that throughout the year until you get your tax return, government's already withholding x amount of dollars from your paycheck. So you might get paid $3,000, but really get paid $2,500 because $500 is going to be taken out in taxes, and you you get that money back whenever you do your tax returns. Doesn't seem like a good deal to me. If you're not a W2 employee and you own you own your own um you own a business or you're a freelancer or contractor or something like that, you have to pay back taxes during the tax season. So you'll owe taxes at the end of the year, and you can do this quarterly; there's different ways to do this, of course. You need to talk talk to your accountant and make sure that they understand—tax situation—everybody's different. And then we have consumption tax. So we have our withheld tax, our periodic withheld tax, periodic tax, and our consumption tax. And consumption tax—all these are required by law—so all these different categories of taxes are created by federal, state, and local law, and they can—you know, one state can be higher, one state can be lower—but everybody pays the federal the same federal taxes. So consumption tax or things called like sales tax, excise tax, property taxes; they are mandatory, but the good thing about those is you only have to pay them when you buy something. So you're not having to—the more you spend, the more taxes you pay—basically, that's consumption tax, whereas no matter who you are uh you have to pay income tax, no matter what you do, no matter what kind of money you spend, you have to pay income taxes.