Transcription
Right? It's one thing to know I need insurance. It's another thing to actually have insurance, a good term life policy. And listen, if you have a whole life policy, I ain't mad at you. Some insurance is better than no insurance. But the key is have some insurance. Get insurance now. Especially if you have somebody that's relying on you to eat or to have a roof over their head, right, guys?
At 30 years old, I was $30,000 in the hole. In other words, I had a negative $30,000 net worth to my name. Today, my net worth is well over a million dollars. Now, I didn't win the lottery. I didn't get some big inheritance. I didn't do some get-rich-quick scheme or build a a flashy startup, you know, tech startup. None of that stuff. I just got financially literate.
So, in this video, I want to break down the things that took me from broke to having some wealth and building some wealth from a standpoint of just basic financial literacy. Now, if you're new to the game of money and learning about money and trying to get better with your money and really focusing on your money, this video is for you.
I had to learn one thing about money and financial literacy, and that was this. If I wanted to win with money and have choices with money and get better with money and leave a legacy of money, then I had to learn how to master the basics when it comes to money, the basic things. And that was all about the financial literacy lessons that I had to learn and go through. So I just want to share a little bit of basics about financial literacy that will help you. And if you find value in this video, drop me a comment below, hit the thumbs up, and more than anything, guys, share this video with somebody who you know. So let's jump into it.
Well, first, what is financial literacy? Financial literacy is simply effectively using money skills to build wealth. And why does it matter? Listen, it matters because of this. I don't want to work till I'm 80 and 90 years old. I don't want to have to work till I'm 80 and 90 years old. And also, when I'm 75, I want to have the choice to not work, but still be able to feed myself. The choice to do what I want to do and at the same time be able to pay for a roof over my head if I have to, or to buy my clothes, or to buy my shoes, or to take care of myself in a dignified way when I get a little bit older. Right? So, I want the choices that come with financial freedom. So, the more I learn to use money effectively right now, the better off I'll be down the road because after all, the best person who's going to take care of that old you is the young you, the you today.
So, another thing I had to get a hold of in terms of financial literacy is this. Mindset is everything. I didn't change my trajectory and where I was going with my personal finances until I changed my mind. Until I changed the way I thought, until I rewired my brain from that poverty mindset, that scarcity mindset that I grew up with and was pounded into my brain when I was younger. I had to get rid of all that. I had to think differently. See, because your beliefs control your behavior, and your behavior is what controls your outcomes with money. But it all starts with your mind and how you think, how you believe. Do you have faith? Do you have some hope? Right?
And a big part of financial literacy is delayed gratification. Saying no to you. For me, I had to personally I had to learn how to be patient, how to take my time, how not to jump on every quick money scheme that was out there to try to make money quicker. Part of a lot of people's lack of financial literacy is lack of patience. Not being able to wait. Right? We live in a society that says you you want it right now, you get it right now. You deserve it right now. You should have it right now. Oh, you're breathing. Okay, you deserve it. No, that's not really how money works, though. You don't just get money because you think you deserve money. You get money because you have the right behaviors with money. And along the way, you start accumulating and getting some money.
Now, another piece of financial literacy is making sure you don't fall into lifestyle creep or what some people call lifestyle inflation, right? That's when your spending increases every time your income increases, right? You get a raise on a job, all of a sudden you stop buying shoes from that place and you start buying shoes from somewhere else. Or you get a raise on the job and all of a sudden you say, "You know what? I need to go out. I deserve to go out and get that car and put that $700 payment on that car because I got a raise at my job." Right? That's lifestyle creep. Your lifestyle goes up. you start funding a lifestyle that you think is commensurate with what you bring in your income. The key that I had to learn was this. Every time my income goes up, I don't have to spend more money. My my whole goal was to keep my expenses about the same over a 10 or 15 or 20 year period. So that my cushion every month between what I brought in and what I sent out in terms of paying for things, bills and so forth, that just increased and increase and increase and increase. Right? When you fall for lifestyle inflation, it's just going to keep you broke. And so what happens is you feel broke when you're making $30,000 a year, but then when you're making 90,000 a year, you still feel broke, right? And then when you're making $200,000 a year, you still feel broke. It's because your expenses have kept going up as well. A key is this. lock in the lifestyle and then don't change the lifestyle when you get paid more, when you make more, when the business starts to take off, you know, your side hustle, you start make a whole bunch of Don't change the lifestyle.
Now, another thing that I had to figure out, and this is a big piece of financial literacy is needs versus wants. Understanding the difference between what you need to live on and what you want to live on to feel good. When you mislabel your wants and you start calling those wants needs, that can be a problem because that's just going to lead to you spending more money when you make more money, right?
And here's another piece of financial literacy that you need to understand and learn, guys. Financial literacy means taking account and tracking your every single dollar that you spend. Because often times, guys, let's be real. We can't control the income we bring in on a moment's notice, right? we can maybe do some things and build some skills and so forth to make more money in terms of our our income or the types of jobs we can get or a business, right? And we can probably raise our income that way. But the sure-fire guaranteed way to raise your income is to spend less money. We control that every single day. We control what we spend almost every single day. And therefore, tracking your expenses is huge. doing a zero-based budget where you spend all of your money on paper first, right? Down to the dime, there's always a little bit of wiggle room because you have these expenses that are varied every month, like you're paying your electric bill. Your electric bill may not be the same exact every single month or your gas bill, right? Or the amount of gas you put in your car. All some of these things are going to be slightly different every month. But if you can sort of understand about what that is in terms of doing a zero-based budget, you're going to be better off. Financial literacy says, "Do a budget every single month so you can hold yourself accountable for all your spending." Right? Every dollar you get has a job. Give it a job. Assign it. That way you can control your money instead of your money controlling you and dictating to you what to do and what not to do. You got to get away from this thing where the money is telling you and you got to start telling the money. That's financial literacy, right? tracking your dollars, tracking your expenses.
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Now, another important piece to financial literacy is automating your money, right? automating your payments of bills or automating your your investments or automating your savings, right? Doing things automatically is really really helpful. Okay? Because a lot of folks, they don't want to have to, you know, go make that deposit, take that five or 10 minutes out to pull up that account and make that deposit or move that money every single month. Trust me, it gets tedious. So, one of the things you can do when you're trying to develop your financial literacy is go ahead and just automate as much as you can. Because when you automate it, it removes one of the one of the bad things about money. It removes one of the the natural things that we we we have and feel when we're dealing with money, and that's our emotions, right? If you automate that, every single time you get paid, $100 is going into your emergency savings fund, or every time you get paid, $200 is going into an investment or investment account, what happens is you don't have to think about it. It makes it simple. It takes out the emotion, right? And not only the emotion, but it also takes out the time and energy that some people feel when they have to deal with money, when they have to pay a bill or when they have to move money from one account to another account or invest money, right? All those things take take time and energy and sometimes it's emotion. When you automate it all, it just happens in the background.
And another piece to financial literacy, we're talking about saving money, where to be saving your money, right? So, you can save your money in a lot of different places. You've got your umbrella called banks. And at banks, they have checking accounts, they have savings accounts, they have CDs, they have money market accounts. Then you can put your money or save your money in an umbrella called the high yield savings account. Right? A high yield savings account is typically online and it's going to offer you a little bit higher return on investment. Whereas your local bank might get you 0.002% on your money that's saved there. when you save it over in a high yield savings account, you might get one, two, 3% interest return on investment, right? So, you've got those different umbrellas to save your money under. Not to mention, if you have a business account, if you have a business and you're an LLC or you file as an S Corp or Core, whatever you do, you need to make sure you don't co-mingle the money, right? You don't want to have your business money co-mingled with the money you use for your personal home life, your bills, you know, your rent, your car payments, whatever you may. Keep your business money, business savings separate.
Now, how you set up your business, LLP, LLC, CC Cor, Sor, however you file your taxes, you always need to have a good CPA. Part of financial literacy is understanding you don't have to do all this on your own, right? Get some help with the things you don't know about. Whether it's a mentor, some counseling, an advisor, a good CPA. There's nothing wrong with adding some people to your team when you're trying to develop and build your personal finance. A lot of this takes just some time of you learning on your own, but once you get to a certain threshold or you have a certain amount of money, don't hesitate to add people to your team to help you out and give you good solid information.
Now, another piece of financial literacy I had to learn personally was about good debt versus bad debt. Now, listen, debt is debt, right? All debt is whatever it could be. It it's it's money you owe, right? But now, bad debt in my opinion is the debt that you want to stay away from. My definition of bad debt is if you have debt or you owe on anything that is not increasing in value. If you have medical bills, that's bad debt because it's not increasing in value. If you have student loans, car payments, credit card debt, all those things are not increasing in value. Now, if you have debt on a piece of rental property, okay, that's different because the rental property 99 times out of 100 is probably increasing in value over a long period of time. So, that's better debt. That's good debt or better debt. It's not bad debt. Right? Now, that's important to know the difference between the two. That's all about understanding money. Now, good debt can work for you in your favor, help you build up some equity, help you build up some long-term wealth, but bad debt is pulling from you and it's also decreasing the amount of money you can put towards you growing your future, towards growing your investments. And if you have a bunch of bad debt, get rid of it. Right? When you get rid of bad debt, you just free up money that you can put towards your future.
Now also a part of financial literacy that I had to learn was the whole thing about credit understanding and putting credit in its proper place not worshiping credit right is good right you can use credit to get you assets that go up in in value and appreciate in value so credit is good I'm not an anti-credit person but at the same time let's not believe this myth that credit is everything or that you need to be using credit all the time you really don't look I I haven't had a credit card in about 14 years. I haven't had any I haven't used a credit card in 14 years, right? I just don't use them. Now, listen, if you use them every day to pay for your bills and all that stuff, and you pay it off immediately, that's cool. There's nothing wrong with that. I'm not a a person that's going to sit here and dictate to you that you should or shouldn't have a credit card. It's not my place because everybody's different. Some people can manage credit cards with no problem. Some people can't manage a credit card to save their life. So, you have to decide who are you? What person are you? Are you able to manage and handle it without an issue? If you can, that's fine. Use your credit cards. For me, in my personal opinion, I don't need them. Haven't needed them. Haven't used them. Had no need for them. Right? But credit is important because obviously when you have a good credit and you want to have good credit, but when you have good credit, it sets you up to be able to leverage to get assets that grow in value, right? You want to go buy an apartment building, a multif family piece of property, you got to have some good credit. It helps to have good credit. It keeps your interest rate lower. It gives you the ability to have less money down, which means you can leverage more. It's good. Good credit is a good thing and you should be working on and building your credit.
Now, is credit the end all be all? No. I've seen people that have bad credit and they work on their credit to get their credit right, but they don't work on the bad behaviors with money that led to the bad credit in the first place. They just want to get their credit right. But I'm saying the behaviors that you have with money are more important than actually getting your credit right. Because when your behaviors are right, your credit's going to follow. when your behavior, when you manage money properly, it's going to show up in your credit score. And when you manage money poorly, it's going to show up in your credit score, too. So, the thing is this, credit is a good thing. Nothing wrong with getting good credit because it impacts your ability to borrow money, uh, to rent, to get insurance, right? And sometimes even to get a job, you got to have a good credit score, which is, you know, interesting, but it's true. But the kicker is this. You just want to make sure you pay all your bills on time. I suggest you check your credit score and and your reports from the credit bureaus a couple of times a year so you can make sure nothing is crazy on there that shouldn't be on there. But pay your bills on time. And you pay your bills on time, not just for the sake of having good credit, but also for the sake of integrity, right? Integrity is really important. That's a big piece of financial literacy that a lot of people don't talk about. But you want to have integrity with money. when you say that you're going to pay a bill on t on on at a certain date, pay the bill on or before the certain date, right? And over time, when you have integrity with money over time, that's going to show up in your credit score as well.
Now, let me double back to debt just for a hot second. If you happen to have debt or have a lot of debt, one of the big things about financial literacy is understanding how to get out of that debt, right? There's a couple of methods that are pretty popular out there. the avalanche method, which is where you list all of your debts that you currently have from highest interest rate to smallest interest rate. Or there's the debt snowball plan, where you list all of your current dates from smallest debt to largest debt, and then you pay your regular payment on all of them, but you take any cushion that you have left over every single month after you pay all your bills. You take any cushion left over, discretionary income, could be $200, could be $1,200. You take that money and you apply it towards the first debt, the lowest the debt with the lowest balance. And then all the while you continue to pay the minimal amounts on all those other debts that you have. And then as soon as you pay off that first debt, the lowest debt, then you take all the money you were taking along with the monthly payment you were paying on that lowest debt, and you put it all towards that second debt, and you just keep snowballing it up. That's the snowball method. I just wanted to mention that because somebody said something the other day ago on a video of mine. They said, "What is the debt snowball?" You never explain it. But I have videos out there that explain the debt snowball. But the point is, you have a couple of ways to get out of debt if you need to get out of debt. And I suggest you get out of bad debt quickly, as soon as possible. I mean, like, throw everything away and just get out of debt as soon as you can. Bad debt, because it's going to hurt you, right? And the kicker is you just choose whatever method of getting out of debt is the best method for you, the quickest method. Whether it's avalanche, whether it's debt snowball, doesn't matter. You just got to get out of debt as soon as possible.
And speaking of debt, let's just talk about the true cost of interest when you make payments on something. Whether it's a credit card, whether it's a a a student loans, or whatever it is, the true cost of interest is what a lot of people don't think about and don't consider when they're making payments on something. What is interest? is the extra money you pay to borrow the money. Right? So, if you buy a car and you put it on payments for 72 months and you are paying 10% interest, you're paying 10% just to actually have the loan, right? You're paying 10%. If you have better credit, maybe you pay 5%. Just to have the loan. You have to pay them to borrow the money. That's what interested, right? So that $25,000 car might over time cost you $32 or $35,000 depending on what your interest rate rate was, right? For those 72 months, right? Think about like this. Think about interest like this. Compound interest works for you in your favor when you actually invest money. As compound interest is just interest on top of interest, right? So, if you invest $100 and you get 10% interest, you have $110 next year, the same day, same time, $110 because you got 10% interest. The next year, if you get 10% interest, you're not getting 10% interest on $100 anymore. You're getting 10% interest on top of $110. And that's compound interest. Now, if you use bigger numbers, that can begin to balloon after 5 years, 10 years, 15 years. Compound interest works in your favor when you're investing money, but when you borrow money, compounding, the compounding effect can work the opposite direction. So, just keep that in mind. That's why you don't want to be borrowing money.
Now, let's talk about emergency funds and emergency savings, which I think is really important. It's just a cash cushion for unexpected emergencies, things that come up. What is an emergency, right? Like, just because you want to do something, that doesn't make it an emergency, right? Just because you really really want to go on that vacation or go to that concert, it doesn't make it an emergency, right? So, understanding or telling yourself what is an emergency, what is not an emergency. Kind of like what is wants and what is needs, right? You got to know that first. Now, I always say that when it comes to an emergency fund, you want to have at least $3,000 to start. Do whatever you can to build up that $3,000 to get going. Now, down the road once you get out of debt and all that, you can build that up or you can continually build it up to three to six months of your monthly needs. Now, some people say your monthly expenses. I say your monthly needs. Look, every month you might have expenses of $3,000, but you really only need $2,500. So, I would say 3 to 6 months of your needs are really important because remember this is emergency. You're so you're in survival mode. If you're in survival mode because you lost a job or something, then you got to get what you need every single month, not necessarily what you want to live comfortably every month. So having an emergency fund first, understanding the importance of an emergency fund, and then having one, an initial one at first, and then later a larger one is huge when it comes to financial literacy.
And keep in mind, there's emergency fund savings, then there's short-term savings for uh large ticket items you may want to get. Maybe maybe you want to get another refrigerator for your home, right? That's a $2,000, $3,000 purchase. That's a more of a short-term savings that you can do in 6 months or less, right? Then, of course, you have these long-term savings goals as well, right? Maybe you want to buy a home, so you want to save up some money so you have 20% down and you can avoid PMI, right? Private mortgage insurance. So, there's emergency savings, there's short-term savings for bigger ticket items or for things like Christmas gifts at the end of the year or your homeowners association fees that are due once a year or your car insurance that may be due every 6 months or every 3 months, right? So, those are some short-term savings. Then you got the long-term savings, things that are more than 6 months, a year, two, 5 years out that you're saving for as well. One financial literacy tip that you can take from this is maybe you need to have different savings accounts for different things. Be careful about putting all your savings in one bucket because then you may overspend on something and have to underspend on something else. So I always like if I have my savings, put them in separate buckets, the things that I'm saving for.
And earlier I mentioned high yield savings accounts as well. High yield savings accounts are just going to get you a little bit of higher return. Keep this in mind though about savings high yield savings accounts. High yield savings accounts, they may advertise 3% 4%, right? But as the Fed funds rate goes down, so does the return on investment in your high yield savings account. Your interest you're getting on the high yield savings account is going to go down when the Fed funds rate goes down. And when the Fed funds rate goes up and they raise interest rates for all of us to borrow money at, making it more expensive to borrow money, then your high yield savings accounts are going to go up as well. Your interest rates are going to go up. So high yield savings accounts have variable interest rates that change.
Listen, a lot of people in America and around the world have a problem with saving. They have a tough time saving. Sometimes that's because they lack the skills to make more money and have more income. Sometimes it's just a matter of the the thing they love to do and where their skill set lies doesn't pay very much or it could be just a a matter of discipline. Uh some people just don't have the discipline to save the money that they need. Right? There's a lot of different issues when it comes to saving money.
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Now, we talked about the power of compound interest, but let's talk about the different types of investments in terms of financial literacy that are important to know the basics, right? Let's talk a little bit about the different umbrellas of investments, right? So you have the umbrella called the retirement accounts that you typically will see offered by a job. A 401k, a 403b, a TSP. TSPs are if you work for the federal government. 401ks are if you work for a for-profit company. And a 403b is what is offered at a nonprofit organization like a school district or a Habitat for Humanity or some type of nonprofit organization. They'll offer a 403b to their employees. But these are all just employer sponsored retirement accounts, right? And sometimes you'll see that they'll offer you a match, right? Which means basically you put in 3% and we'll match your 3% and give you another 3% to put in, right? Now, those are retirement accounts that are employer sponsored. That's the umbrella. Right?
Another umbrella is your brokerage accounts, right? where you go and open up a Fidelity account or you go and open up a Schwab account or a Vanguard account or a Robin Hood account, right? Your own brokerage account is not an employer sponsored retirement account. Two separate things. With an employer sponsored retirement account, you don't have as much control as if you go open your own brokerage account as say a Schwab or Vanguard or what have you. You have control over that umbrella because now you can decide what you want to invest that money in. with the employer sponsored retirement accounts, 401ks, 403bs, TSPs. They're going to have a group of things that they allow you to invest in under that umbrella, right? And you can also at a brokerage account, you can open up a individual retirement account, IRA, or you can open up a Roth IRA, right? Your choice. Now, the difference between a regular IRA or a traditional IRA and a Roth IRA is that the traditional IRA is where you decide to put money into a traditional retirement account, but when you take that money out down the road, you pay taxes on it. But the money you put in right now into a traditional IRA is money that reduces your taxable income every year. So, if you put $10,000 into a traditional IRA today, you can take $10,000 off the amount of money that you pay taxes on because you're going to pay taxes on that traditional IRA when you withdraw the money down the road. The difference with a Roth is a Wroth means you put after tax dollars into a Roth individual retirement account. A Roth IRA, you put money in that's already been taxed. You get it, it's been taxed, you put it in a Roth IRA. Then when you go to take that money out of the Roth IRA, you don't have to pay taxes on that money at that time.
Now listen, you just need to understand in terms of financial literacy what the differences are and what your options are right now. you have money at a 401k, a 403b, a Roth IRA, a traditional IRA, in an individual brokerage account. You can choose whether or not you want to invest in stocks, bonds, ETFs, or index funds. Now, let me say this. Index funds are just a version of mutual funds. Mutual funds, you've heard the term mutual funds. Mutual funds is actively managed funds. Mutual funds are a bucket of stocks that are actively managed by three or five or 10 different people who actively manage that mutual fund. So the fees are higher. You got to pay more fees on a mutual fund. Now an index fund is a type of mutual fund where it's not actively managed. Index funds are more passively managed because it's just following an index. It's still a bucket of stocks, but it's just following a specific index, right? So therefore, it doesn't have to be actively managed. So the fees on index funds are lower than on just regular mutual funds. Now, ETFs, exchangeraded funds are very similar to index funds. Exchange traded funds, ETFs are traded daily. So the price fluctuates throughout the day. Whereas an index fund, it only has one price every day. Whatever that price was at the end of yesterday is what the price today to buy that index fund. Right? But the key is this. ETFs, index funds, mutual funds, they're all just buckets of stocks as opposed to investing in an individual company, an individual stock, right? So just understanding some of those basics are going to help you out tremendously in terms of financial literacy. And again, with any of these investments or investment types, you can set it and forget it. You can say once a week I'm going to put $200 in this mutual fund and not even pay attention to it for a while. You can say every single month I'm going to drop $100 into this ETF. You can set up your brokerage account where you buy your ETFs, index funds, stocks, bonds, etc. You can set it up where that where that's withdrawn automatically from your checking account. And then when it comes to ETFs, index funds, mutual funds, stocks, bonds, you have to choose which ones you want. When you open up a brokerage account, even when you have a 401k, a 403b, or TSP, you still get a chance to choose. But oftent times when you have an employer sponsored account, your choices are going to be limited than when you open up a brokerage account and you do that investing in a brokerage account. And you can do them both, right? Just because you have an employer sponsored retirement account doesn't mean you can't open up your own brokerage account and do your own investing that way.
Now, since we're talking about financial literacy, I got to talk about real estate, right? Real estate is one of the greatest ways that rich people become rich, right? I bought my first piece of real estate when I was 30 years old and I bought a number of pieces of real estate, got rid of some real estate, and now I'm down to just two pieces of rental real estate. But the point is this, having rental real estate is huge in terms of your portfolio or growing wealth or understanding money or understanding how money works. Real estate is a great investment. Don't sleep on it. Right? There's cash flow. If you buy an income producing piece of real estate, there's cash flow, meaning every single month you're going to get paid. There's also equity that you build up. So, as you pay the mortgage down and the house goes up in value or the the duplex goes up in value, that spread is the equity of what you between what you owe and what it's worth. So, you have equity in a piece of property. You're getting that monthly cash flow. You're also getting a few tax breaks because of write offs and so forth. And you also own something tangible. You can touch real estate. It's not a paper asset like a stock or a bond that's on paper, right? Real estate is something that you can actually touch, you can go to, you can see. You don't have to imagine it. It's not up in the air. It's something that I always suggest people consider adding to their portfolio as they're trying to increase their financial literacy, trying to learn a little bit more about money and grow money. Right?
Now, it has its risk, right? Let's not talk like real estate has no risk. It does have risk, right? Right. If you have income producing real estate, you've got a tenant, whether it's a commercial building or whether it's a a residential real estate or if it's multif family, what have you. You have tenants that can tear up your property. I've had close to 200 tenants over the last 25 years of me owning property. And I can tell you this, the most important piece of real estate that you always got to do if you have incomeroucing real estate where you have tenants, the most important thing you'll ever do with real estate is picking the people that you choose to be in your piece of property. That's the absolute most important thing. It's not about how it looks. It's not about the windows, the carpet. It's none of that. It's not even really about the location for the most part. Now, location obviously matters in real estate, but you can have a bad location and still have a wonderful tenant, right? You can have real estate in the most rundown neighborhood in the world, but guess what? Everybody that lives in bad areas ain't bad people. Let's dispel that myth, right? Just because you have a piece of real estate in the inner city or in a a place that's not very desirable doesn't mean that you're automatically going to get a bad tenant. Not true. Some of my best tenants that I've ever had have been in my pieces of real estate in the worst neighborhoods. So, it's all about when you own a piece of property and you're renting that piece of property out. Yeah, you want to have it in a in a desirable location. That's automatic. That goes without saying. But you got to have the right people in it. You got to choose the right people to put in it. But real estate, it's a great investment and it's a wonderful way to understand and learn about money.
Now, the other thing about financial literacy that I think I need to at least bring up is having different streams of income. Listen, you don't have to have 30 different streams of income. When you do 30 different things, you're not going to do any of them. Well, you don't even need 10 streams of income, right? You see these YouTubers get on here and talk about, I got 17 streams of income. No, you don't need to have that many streams of income. Right? I've got about eight or nine or 10 different streams of income, but guess what? I really make the bulk of money on two or three, right? So, when you're talking about financial literacy, don't try to spread yourself too thin and think that you got to have six and seven and eight different streams of income. Maybe you have three, maybe you have four, but you got to focus on one or two to really build them up. That might be your job, it might be your business, right? But whatever it is, just understand in terms of multiple streams of income, you don't have to have a lot. Right?
And then also, let me say this, in terms of financial literacy, you got to understand the basics of financial literacy, which is insurance, estate planning, wills, and living trust, right? You got to know these things because we're talking about financial literacy. A big piece of it is passing on money, right? Because listen, you can't take money with you. You're not going to be buried with all of your cash and all of your stocks and bonds and gonna put it in a box and put you in the ground. It's going to stay there. No. So therefore, you get money, it's going to flow through you and it's going to go on to somebody else, right? It's going to when you leave this earth, it's going to be passed on to somebody else, right? How do you pass it on? Do you allow the state to tell your money who it should go to through probate or do you come up with an estate plan where you have a living will where you have a power of attorney and a healthcare power of attorney or a healthcare directive right are you telling your money where to go so that when you pass away those orders are followed do you have insurance that says that if something happens I don't have to there's nothing wrong with doing a gofundme but listen do I need to do a gofundme or do I have the insurance that's going to cover my burial and also provide a little something for my loved ones. Right? So, this is a big piece of financial literacy, understanding the importance of those things. Not just understanding the importance of them, but actually putting them in place. Right? It's one thing to know I need insurance. It's another thing to actually have insurance, a good term life policy. And listen, if you have a whole life policy, I ain't mad at you. Some insurance is better than no insurance. But the key is have some insurance. You don't want to wait until you get rich to say, "I'm going to get insurance at that point." No, you get insurance now, especially if you have somebody that's relying on you to eat or to have a roof over their head. Right?
Speaking of insurance, term life insurance, health insurance, disability insurance, renters's insurance, or homeowners insurance. There's several different insuranceances that you want to have, right? Listen, I I understand insurance. The cost of insurance has gone way up. I get it. But you need to have some insurance, guys. Don't be driving down the street with no insurance and then you get in a wreck with somebody and now you can't pay the people that you messed up their car. You can't pay them because you don't have insurance. Get insurance, right? Protect your income, protect your home, protect your family, protect your legacy, protect your wealth with insurance.
And then also, when it comes to financial literacy, understand taxes. Now, I'm not saying you got to understand all the tax code, right? That's going to be impossible. But one of the things I did a few years ago, guys, when I got real serious about building a business on the side is I went out and I interviewed several CPAs and I said, "You know what? I'm going to choose a CPA as opposed to just taking my taxes to anybody. If you know my story, I got audited before by the IRS when I had an eBay business." So, after that whole fiasco, guess what? I said, "You know what? I'm going to go ahead and get me a solid CPA who understands and knows business and can keep me in line, keep me in check, make sure I pay the right amount of taxes on a regular basis, right? So, get you a good CPA. Be careful about just taking your taxes to any old body to do them because any old to do them might mess them up. I've been there. I've done that. It ain't pretty.
Now, another thing is this. Financial goals, financial milestones, financial vision, financial mission. Do you have them? Right? Be thinking about those things when you're trying to understand financial literacy. What are my goals? When I say goals, I mean specific goals, not just, oh, I want to be rich one day or I want to have a million dollar net worth. That's that's that. Listen, listen. When I say a financial goal, I mean a specific goal, money amount, time, money, time, so you can measure it, right? If you say, "I want to I want to have a million dollars." Who knows if you reach that goal or not? That's not really a goal. That's a aim. That's a hope. That's a wish, right? But if you say, "I want to have a million dollars by January of 2029. I want to have a million dollar net worth by January of 2029." That's a goal because you got a money amount associated with it and you have a time associated with it. So now when 2029 gets here, we can measure if you made that, if you reach that goal, right? So you want to have goals and things in mind, milestones you want to achieve, right? Maybe you want to pay off all of your debt. Maybe you want to buy a home.
And then finally, guys, this. Teach your kids about money. Teach your kids about personal finances. Teach your kids about delay gratification. Teach your kids about patience, about discipline, about consistency with money, about giving, about helping other people with money, right? Giving a a small amount. Every time you get money, give a little money away, right? Give a little money to help somebody else. Go buy somebody some gloves. Go feed the homeless. Go go go buy somebody something they need right now to help them out, right? Or just simply give some tithe, an offering, right? Do something with money where you're giving back with money. Teach kids these financial literacy basics so that when they come along and they get of age, they can start practicing these principles, these basic financial literacy principles, and then talk about it. Right? You want to be the type of family that discusses money, talks about money, doesn't make money a taboo issue, right? Because listen, when you make it taboo, nobody's learning, right? Nobody's understanding. Nobody's actually becoming better with money when you never talk about it or you sweep it under the rug, right? Have the conversations about money on a regular basis. That's how you build up financial literacy so it becomes a part of everyday life and not some thing where you get 25 years old and you never talked about money so now you got to learn it. Well, if you come from a family that talked about money, discussed money, talked about expenses and then it becomes a normal part of your life and it's not taboo, right? And it's something that you understand and you know and has soaked into you because your parents exposed you to it. Kids inherit your habits, not just your money. So I always tell people that when you have kids, involve them in the budgeting. Sit them down so they can see what what all these things cost that they enjoy every day, right? The house, the food, the electricity, the gas, right? The the the what it costs to run that car and take that car and take them to school every day or to practice it. Expose them to this this stuff early. How do you save, right? How do you invest? Let them What is compound interest? Get them to understand these things at an early age. It'll do them well. They can handle it. Trust me. All you're doing is giving them a head start in life so they can start doing at 10 or 15 what somebody else is starting to do and think about at 25 and 30.
So there you have it, guys. That's financial literacy in 40 minutes. If you got value from this video, let me know in the comments. I got value. Smash the like button for me. But more than anything, share the video with somebody else, guys. Share the video with somebody who you think, you know, this person could probably benefit from this information. And let me know in the comments, did you learn financial literacy at a young age or not? Let me know down below. Until the next video, peace.