The Core Four of Personal Finance - Advanced Students | BrainyMoney And Son Han, CFA,CPA | Skillshare

The Core Four of Personal Finance - Advanced Students

BrainyMoney And Son Han, CFA,CPA, Personal Finance Made Easy!

The Core Four of Personal Finance - Advanced Students

BrainyMoney And Son Han, CFA,CPA, Personal Finance Made Easy!

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22 Lessons (1h 1m)
    • 1. 01a Intro

      2:26
    • 2. 06 Beginnger Core 4

      2:19
    • 3. 07 Advanced Core 4

      3:39
    • 4. 08 Repitition

      1:07
    • 5. 10 Screw you fund

      3:04
    • 6. 12 Core Principal 1

      2:44
    • 7. 13 Emergency Fund Size

      3:31
    • 8. 14 Automate Savings

      4:27
    • 9. 15 Pre and Post Tax

      2:46
    • 10. 15a 401k and 457b Basics

      3:36
    • 11. 15b 403b Basics

      1:26
    • 12. 16 Savings Wrapper and Pre Post

      1:00
    • 13. 17 Other Savings Accounts

      2:33
    • 14. 18 Tips on Income and Exp

      2:34
    • 15. PFA 18a Lifestyle Inflation

      2:45
    • 16. 19 Invest in Yourself Fund

      3:24
    • 17. 20 Auto Savings Conclusion

      1:56
    • 18. 24 Core Principal 3

      4:46
    • 19. 25 Invest in Yourself

      2:01
    • 20. 26 Core Principal 4

      4:06
    • 21. 29 Pitfalls of PF

      4:15
    • 22. 30 What we learned

      0:38
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About This Class

You should have already taken the Beginner Class 

Once you've taken that class and you have a positive savings rate, an Emergency Fund and a positive net worth, you'll be able to take this class. We build on the foundation we learned in the beginner class to put our foot on the gas pedal and really ramp up our financial security. 

In the class we cover the Core Four of Personal Finance for the Advanced Student. We want you to build your wealth (which is different than just your salary/income).

We also discuss:

  • Automatically saving 30% of your income
  • Creating more than one source of income
  • Enjoying life today

Join us for this class, inspire yourself and your peers to take control of their financial lives. 

Meet Your Teacher

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BrainyMoney And Son Han, CFA,CPA

Personal Finance Made Easy!

Teacher

 

We're here to teach about personal finance and to keep you motivated. 

Learning what you need to know to take control of your finances is easy. What's hard is staying motivated.

We're here to teach you about personal finance and to keep you motivated!

 I love connecting with my students so feel free to add me on LinkedIn!

 

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Transcripts

1. 01a Intro: Hi, everyone. Welcome to the classes. The core four Personal finance. Thea Vance Class No. So you hopefully you've already taken the beginning class. If not, I would go back and take the beginner class. It's really important to get down those four steps on an accomplished every one of those four items before moving on. If not, you're just gonna get overwhelmed. And this is gonna feel like you're right reading 1000 page book. We don't want that. So go back. Watch the beginning class, hit those four steps and then come to this advanced class. So you're nothing advanced class because you said, Look, son, I've accomplished those four things that you laid out. And now I want to become even better. And that's great. The reason why I'm so passion about personal finances. That look, it changed my life on the child of a refugee family. We didn't have anything When we came over to the United States. My parents had nothing right. And then what I want to show you is my financial journey. But that's just a little bit of that, right? I don't want to talk too much about myself. I want to make this about you. So we'll talk about the four steps you can take to become better off financially and living a stress free life. And that's their right. We're not trying to become millionaires or billionaires. What we're trying to do is just live a stress free life so we can enjoy our families. You better father or husband or wife or mother. I'm in a better sibling as you talk. You heard me talk about during the first. So now, as always, we have an agenda which you can see below me. So we're gonna go through the introduction, talk about my financial journey a little bit. We're gonna review the core for personal finance on the beginner side. Right? You're gonna make sure that you hit those four items that he didn't. And you have a lot of high interest credit card debt. Outstanding. You gotta go back, get fixed that you get rid of that before moving on to the advance calls, and then we'll go over the core for our personal finance on the advanced steps. So once we're gonna go through the advance steps to go through them slowly, so you understand them and some of them, you'll feel like some informations repeated. But I promise you, if you've only heard this one time, you don't you don't have it under you don't understand it yet. Okay? So it's really, really important that you read through this and you see it multiple times and we're going to reiterate a few things because we got a hammer home. Those points, okay? And I've been involved in finance for over 10 years now. They're still thinks I'm learning that I really get it. I'm like, OK, so it's really important that we do repeat a few things because repetition is the key to success. Come coming close to the end of class would talk about the pitfalls of personal finance. And then finally, we're gonna hit a conclusion and talk about what we learned today. So with that being said, let's get started 2. 06 Beginnger Core 4: so I'm on a roll. You know, I've been in front of camera this entire time, so I think I'm actually gonna stay in front of camera for the entire class because his class, it means so much to me. It's near dear to my heart, on DSO A lot of life lessons that I've learned about this class are working on this class. So that being said, let's let's talk about the core for So this is the beginner court for right earn more than you spend and created $1000 emergency fund. What does that do? One. It shows that you can save. So you have a positive savings rate, right? Somewhere between hopefully like 5 10% if not that high, it's still okay. You're not spending more than you earn your earning more than you spend, so you have a gap there on your creating a $1000 emergency funds. That's a really small emergency fund, right? And that's why it's the beginning. Of course, in this course will talk about what your emergency fund should actually be. You paid off all your debt except for your house. What does that mean? It means that you don't have any high interest debt like credit card debt. That's compound daily again. If you don't understand what compounding is, you have to watch my course on DSO. You paid off all your high interest debt, which is really great. Hopefully your house is, you know, 45% interest rate, which is good. It's a low interest rate, right? And then the 3rd 1 is your investing in your retirement. So hopefully your lease getting your match. If you have a 41 cane, if you don't have a 41 K hopefully opened up a Roth IRA or traditional IRA something along those lines that we talked about beginning class. So you know you're putting your savings away for your emergency fund. Hopefully, that's in something like the American Express Online savings account. Get no affiliate links year. I only and the only recommend what I used self. And the last thing is, you're enjoying life and you're creating incentives so you know how to create financial goals and you know how to achieve those financial goals. And I think that's a really important part here, and that you're enjoying life, and I think that's such an important part, right? Creating yourself. And as you remember, from the first class, it's the whole treat yourself. That's such an important part of this, right? Money is here for us to enjoy and live happily eso we shouldn't. I don't believe at least in this is my class. I'm gonna teach where I believe. I don't believe in extreme frugality, toe, you know, not have anything or massive coupon clipping those things that just don't unless that makes you happy. I don't think you should be doing those things. So money is it means the happiness, right? And so I think that when you're enjoying life in creating incentives, you're almost there. So again, those is just a rip east. A repetition of the core for beginner. We know where we started. 3. 07 Advanced Core 4: so the key to the beginner class into the advanced classes. The live below your beats, right? Easy to say, hard to do. It's like working out, okay, eat less and work out. And that's gonna be really healthy. Very simple to say, but hard to do because of all the societal norms where it's like, Oh, you're not rich. You don't have a really nice watching a really nice car on DSO. All this stuff really confuses us. And so I have. You can avoid all those things which are more psychological, which we'll talk about during the pitfalls. Personal finance. I like that name. We'll talk about the psychological effects that we have to avoid, right, so the key is living below your means, and that's tough to do. But if you could follow that when you're ahead of the game, so let's talk about the core for the advanced, the core, the core for the advanced class. Okay, so first folks, some building your network and fight by automatically saving 30% of your income, so that's gonna be a really important point there. I want you to totally on the automatically. Don't let yourself make the decision every month to say, you know, should I savor should not They should automatically happen. It does with me, right? My network is a $400,000. You whilst on your way out of the game. You must be really disciplined. I'm not. If money comes into my account, I spend it so I can't let it come into my checking account. That's why I automatically save. So again, Number one is focused on building your network by automatically saving 30% of your income. Number two is learn more about personal finance. Okay, so you've taken my beginning class, and now you've taken my advanced class. Well, that's really great. That's two hours worth of information, and I've condensed down a lot of it for you, but they're thought of things that I haven't covered there. Also, different views that I write are people whose views are different from mine. I think it's important to read those things right and understand why the sun believe this and somebody else doesn't believe this wise, extreme frugality. Good for this person, but not for sun. When what you're trying to disinterment is, you're gonna read all these sources, right? multiple sources on you're gonna determine what's best for you, right? And minor, Just general guidelines. I'm giving you the tools to live a successful life financially. But it's you. You're ultimately your decision on what you do is right. This is personal finance. So learn more about personal finance, and we're gonna learn about how we're giving you re sources. To do that through a brainy and then number three is create more than one source of incomes . This is very, very important. Creating one more than one source of income creates, like a depth, a diversification away from risk. Right. So if I lose, my job lets I'm actually talking about myself. If I lose my full time job right now, I have multiple source of income to support me for a while and so actually have three separate other incomes other than my full time jobs. That's 47 sources of income for me, in which, like I lost my job and actually be okay, I also have an emergency. Fine. But I have other sources of income and so that's gonna be really important. We'll talk about how you can build other source of income as well, and the 4th 1 is similar to the 4th 1 For the beginner class, it start enjoying light today. Tomorrow is not guaranteed. Over the last two years, I've seen a couple of deaths and had deaths in my family and other things and that I just learned that you know what money is here for us to enjoy, not over. Enjoy. Right. And then now we're in a horrible financial situation, but for us to enjoy. So start enjoying your life today, and I'll talk about where I enjoyed my life. Now how you know, uh, earlier time? It's not for me but traveling. A lot is on, and I live in Costa Rica part of the time now, and that's really great on. And that's the time we're not gonna have my weekly Q and A's is when I'm in Costa Rica. Maybe maybe I can try to find a place to do it, but we'll see. So that's the core for the advanced class. Okay. To repeat them, focus on building your network by saving 30% of your income automatically, right? Scary. 30% a really high number. Learn more about personal finance through bringing money, create more than one source of income and then start enjoying life today. Right tomorrow is not guaranteed 4. 08 Repitition: so we'll go over a few slides here. First repetition. Okay, so you can read this libel. What I'm trying to say here is that look, you're gonna Here's a couple of things that you heard in the last class. Don't stop this class. Once they look so never to learn this, I'm done. You've got to hear multiple times. One of my best Professor Sandy leads. When I was in grad school in the business, quite ut Austin. What he said to me was, Look, you have to see things multiple times. Do you think you understand it? But you don't. You got to see it three and four times. What he was talking about at that time was the black Scholes pricing model in Cap Em for any of you that are financed students, but capital asset pricing model, it doesn't matter. What he was trying to say is, Looks on, You don't understand it. You may think you do, but you don't on. And that's why we talk about personal finance and why we're doing it multiple times we have the begin. Of course, Now we have the advanced course And why the core the second principle of this is that Look , you've got to read on your own and read it multiple times You gonna live and breathe this stuff right on dso That's gonna be an important part. So, yes, we repeat things that are very similar to the first course. Not everything is, but certain things are. And the reason why is because, look, you've got to hear it again, okay? 5. 10 Screw you fund: So before moving on, I want to talk about your emergency fund. It's also what we call a screw. You find something that my professors at U T talk to me about a lot, and that was very helpful because essentially what it is is if something happens that work that you don't like. Somebody asked you to do something unethical. You get sexually caressed. There's so many other things that could happen. Your company moves. It doesn't have to be. That dramatic company moves to a different location in the city, right in Houston. It can take you now, and I have to get somewhere. So if they change their headquarters and it takes you now two hours to get to work, maybe you don't want to say there. That's what an emergency fund is. It's essentially to tell your company. Go take a walk. Why it's important is that it gives you a sense of stability in a sense of security because because you know, if anything would happen, you would just walk away. So one thing I'm going to stay here is you see on the second bullet point is that too many people focus on salary there like ho. Hey, you know, I make $100,000 a year, $200,000 a year. But if you're spending more than you even earn doesn't really work out. So what you need to do is have a positive savings rate and focus on the difference between your pay and how much you spend. Keep the amount you spend really low. We'll talk about a definition of lifestyle inflation here in a second. But just keep your spending low. And then, when you get any raises, your trading a bigger gap. I like to throw out interesting facts. And so on the third bullet point you conceive interesting back about NFL N B A players. Okay, so 78% of NFL players are either bankrupt or under financial stress within two years of retirement, right? These are millionaires safely with NBA players, 60% of them. After five years going into retirement, go bankrupt on. And so you could tell that look how much money make doesn't really matter, like you will make some minimum apple once you exceed like on X amount of money and doesn't matter anymore, because if you're spending is just out of control. Your spending way more than you actually make Doesn't matter. And that's what I wanted to show you with that third fatso again. Remember, the key take away here is that your emergency fund is also your screw you fund. If anything bad would happen on work and moved locations or anything for any reason you wanna walk away, you can. We will talk about the size of your emergency fund and expanding it from past $1000 in the beginning. Class 2 to 12 months over. That here in a couple of lectures. Still don't compare. I know it's tough, but this is personal finance. Okay? Your journey is gonna be different than mine. That is gonna be different from the other people's right. Not You may not go to college. May not have needed to go to college. Maybe your h back or you work on Carter and automotive technicians. Those people do well as well. And so you don't have to follow my path. Okay, I'm giving you my path is like one possible path and that's it. So don't compare. I just gave you mine as a benchmark. This is personal finance owning a home may be great for you, but not for me, right? Like. And when I say owning a home financing, remember, there's a difference from owning and financing. And so I rather spend my money traveling and surfing rather than, you know, owning a home in dealing with all of that, mowing the grass and all those things. I don't want to spend my weekends doing that. I'd rather be making this scores for you. So again, this is personal finance or try not to compare. 6. 12 Core Principal 1: So let's talk about core principle number one that you see underneath be increase your network by automatically saving 30% of your income. Okay, so that's gonna be a really important point. The automatic point, right? So let's move forward here. So on the next slide, what you're gonna see here is the savings, rapper. Okay, so we're gonna start with We're gonna start with the emergency fund between two and 12 months. In the beginning. Class, we said Okay. You need $1000 in your emergency fund. We all know that's probably not enough, but we need to make some goals. We feel confident ourself. You've made that call. You've accomplished that goal. But $1000 Now you get to 2 to 12 months of operating expenses will cover in a second how much you need between those two and 12. Then you're gonna hit debt, right? Eso all your high interest debt is done. So now you're gonna make debt payments on your house. And, yes, that is considered savings. Right? So any payments to debt is considered savings. So then you're gonna go to your company 41 k war for 50 70 which is matching the match part right. So let's say my company offers a 6% match. Wanna invest at least 6% or save at least 6% in my 41 K because they're allowing me to match that they are matching that contribution. Next up is a Roth or traditional IRA wire raw slash traditional IRA and not fill up my companies for a one k without a Roth and the traditional area and let you select your own stocks. Okay. And so that's where I'm gonna go back to Warren Buffett's approach, which is invest in the S and P 500 index fund, which is very low cost. So that's the Ross last traditional IRA. So you have that and then you have a company for one day. So now you're gonna Philip that bucket, right? So you re bucket before one case, fill it up to the match, then focus on your Roth or traditional IRA in which we can see here and then focus on the floor one k, right, Philip, that bucket again. So fill it up all the way up into its max, and then we're gonna talk about betterment online savings accounts and that's where those next, right. So this is an after tax account. You filled up your 41 K filled up max out your Roth and traditional IRAs. And maybe you don't even have any more dead at this point. Now you have betterment or online savings account. This is a situation. I'm right and so I don't have any debt. My emergency fund is done, and I filled up my 41 K on and I can't take Roth or traditional IRAs anymore. I can't take him because I'm over the income limit. So now I'm just left with betterment online savings. And that's where the remainder of money money goes. Roughly about $1000 goes in after tax savings, which will talk about post tax or after tax savings accounts. So where do you start? You start up here with the emergency fund, right? And then you go down to the bottom and you're gonna end here with the betterment online savings post tax accounts, which we'll talk about the second year. So that's your set savings rapper. Your next question would be what's the size of my emergency fund and wouldn't cover that on the next 7. 13 Emergency Fund Size: Okay. One thing I forgot to mention is go ahead and print that hand out. You know, hopefully already have. But they handouts gonna be really important as we go through this to write those things down. So you know it can be logged into your memory. It's gonna be really important to do that. To determine the size of your emergency. Go down to your hand down into the question How many months will take you to find a new job ? How many months will it take you to find a new job? Let's say that month that numbers, let's say like, six. So you take that number, you say it's six months right To find a new job, you multiply that by your operating expenses per month. How much should cost you to live every month? And let's say that number is 3000 bucks. Then that's what you need in your emergency fund. You need $18,000 in your emergency fund because you're saying it takes me six months of my new job. I spent $3000 a month, so I need $18,000. It's also lie. It's important. Keep your expenses low if you can keep your expenses low. Then what? You're multiplying that number by, let's say, six months, let's say only spent $2000 a month. We'll island $12,000 in my emergency fund. So it's way better to keep that number low, as not as long as you possibly can, but keep it look right. And so I think that's gonna be important. That factor here. So that's the size of your emergency fund. So I provided some guy pose for you for your emergency fund. It's kind of based on your marital status. But that also assumes that Bullet Partners work. OK, so I have marital status in the first column number of income owners in that in your household in the second column, along with a number of dependence and then amount in your emergency fund in the far right hand column. So what you see here is like, let's walk through a couple of examples married with no kids. Okay? So assuming that both parents work Sorry, both partners worth you have two income earners and no dependence. How much do you need your emergency fund? 2 to 3 months. Why is it 2 to 3 months. It's because you have to incomers. So if I lose my job and it's not say that I was married, my wife could keep working and we'd probably still be okay. So the next one is meat, right? Single with no kids. I'm one income earner and I have no kids, no dependence. How much do I need in my emergency fund? 3 to 4 months, I spent about $3000 a month. My number is $9000.9000 dollars in emergency fund. Yes, I do. And that's why I'm so I can sleep so well at night. And then we'll go through the other one's married with kids. So two income earners with no with dependents, you're at 4 to 6 months on. And that single with kids. Okay, so I know single moms out there. If you have one income earner with dependence, you're likely needing seven and 12 months because if something goes wrong, you want to make sure that you can support your child, right? And so single with no kids is the highest amount that you would need in your bird dizzy fund Again, this represents a number of operating months are operating expenses, not income. So you could be making $10,000 a month, but only spending two right. So your emergency fund should be based on how much you're spending, not how much of your earning what that shots ring a bell in your head is like, Hey, son, I remember this. You talk about this wear and it's related to retirement because we talked about replacement income. Okay, so it's all based on income earners. And then, obviously, if you have dependent your emergency funding to be a little bit bigger, to support your dependence, your kids in this case. But it could also not be kids. I want to take into consideration everyone's financial situation. Family status situation could be a new elderly parent or different type of dependent. So think about the dependence and the people who earn money. So how many people are money in my house and how many people depend on those people who earn money for me? I'm the only person who owns our that lives in my house, and I'm the only person who makes money, and no one depends on me inside my household, so I have no dependents. So again, it's very important for me to have somewhere between three and four months, and that's what I have. So that being said, those were the guy post for your movie. 8. 14 Automate Savings: So this slide is the very important slide. Okay, how in one of my favorites of this class is automate your savings, You gotta automate automate. You got automate. Okay. Salary deductions for 41 K's automatic transfers to your savings accounts or emergency fund Automate as much as you possibly can. Here's that really keep our okay. So I'm gonna slow down because I know that I get very passionate. I speak very quickly. So we talked about automation. We also talked about lifestyle inflation. I brought that up a few a few times. And what lifestyle inflation is. Let's say I'm driving that camera again. OK, let's go back to my past. I'm driving. I just paid off my student loans. I have a Toyota Camry with the leaky sunroof. I would go on dates and water would. It was raining. Water would get on my dates head right on a red. But I still kept my car. Why? Because he's paid off completely paid off. My insurance was really low cause it wasn't working. What lifestyle? Inflation is. Okay, I'm gonna repeat this lifestyle inflation is is when you increase your level of spending without the General increase in the amount that you make okay, or even if there is. Okay. So let's say that I paid off my student loans and I decided to sell my Camry and buy a brand new Mercedes Benz E Class or C class or whatever, Right? A $50,000 car probably definitely qualified for a $50,000 car. Would that have been financially prudent? The answer's no right. But that's not the only thing. It creates a lifestyle inflation. Now, I'm used to driving around in this luxury vehicle right now. I can't ever go back down. I can't be like Oh, man, I'm gonna get old car again. Now I'm gonna feel bad about myself and all the stuff. I trolled my Camry for another five years after I paid off my student loans. Okay, so what we want to avoid is lifestyle inflation just constantly spending more and more money. So instead of $3000 a month, it cost $4000 a month to live now $5000 a month, $6000 a month. Um, what you want is a creative, larger gap. So as I get raises, my spending stays. The same. Okay, My spendings here and my razor here. Okay. And this is how I built my network so quickly. But how did I do that? Right. I know that. Finances mainly psychological. I know that if I get money in my checking account, I'm gonna immediately spend it. I just have some sound. Sort of no control over this, for some reason, right? What I did was increase my 41 K contributions for every raise I got. I increased my 41 K contribution by that same exact amount. Okay, you'll be surprised. You could just still live within your own paycheck, right? You don't like It's not like, OK, I got a raise and I was not. I didn't have enough food to eat. So now I definitely have enough food. I was eating well, everything was fine. You know, like on dso When I get raises, I put them straight back into my 41 k like help doing that. Okay, so that's the first bullet point. Increase your 41 k slash IRA contributions up to every race. I kept doing that, and then I max out my 41 k Then I got another race. Well, I can't put it into my 41 k anymore, because I'm at that. Allow maximum contribution, which is roughly $18,000 right now. So what did I do? I What I then worked on is my tax withholding. I increased my tax withholding. Okay, so why did I increase my tax withholding? People are gonna say, son, you're, you know, with tax withholding if you increase that that I arrested holding onto your money, okay? And when they hold on to your money, what happens? Well, then you could have earned interest on it. And there's time value money. We'll take my time value, money, class and very well versed in that. I understand what I'm doing here, But what I'm not doing ok, which is a very important point, is I'm not letting lifestyle inflation creep up on me. Why? Let's say I got a 5% raise, which actually just did. I got a 5% raise. I put that 5% into my tax withholding. Okay, so yes, my irises holding onto my money, but at the end of the year, Okay. I'm gonna find my taxes in March. I'm gonna get that money. I'm gonna put it right back into savings. But if I allow that money to come in, I guarantee you I'm not gonna be like, Okay, you know what? I'm put this away in savings. For some reason, I cannot do that. Maybe you're really disciplined. But personally, I am not okay. I cannot do that. So what I said is good, I'm gonna put it into the savings account with the I. R. S. And then I'm gonna transfer that IRA savings account into my American Express Online savings account. Okay, so it's really, really simple. This prevents lifestyle inflation. So let me summarize. That was a little long with a little verbose, any raises that you get, increase your 41 K or your tax withholding by that same exact amount. The reason is because you likely don't need that money t live. Especially if you're on essentially doing well already without this race. So any raises go into your for one cake warranty. Your tax withholding account. What? We are trying to prevent his lifestyle inflation 9. 15 Pre and Post Tax: so that lifestyle inflation point is really, really important. Why? Because that's what will set you apart from everyone else when everyone else is upgrading their cars and upgrading their houses, You love. You know what? I don't need that. What's that can allow you to do spend more time with their kids? I'm pretty sure that if you have kids or you have a significant other, they're gonna be more happy with you if you spend time with them rather than be constantly stressed out about the house you just bought. So enough about that. I know it's a little bit of rant there, but it is very important to me that you prevent lifestyle inflation so the next liable or hitting is splitting savings into pre tax and post tax. Okay, so what is pre tax and post tax meat? It's really when you're paying taxes. If you can remember from, I'm beginning class, which is why it's important to watch that and then watch this class. Is that certain things like a Roth Ira? OK, Roth IRA needs a tax now, but I don't have to pay taxes in the future. A traditional IRA means that I'm not gonna tax now, so I'm lowering. My tax will become, but I will have to pay taxes in the future. Okay? Anything with Roth in front of it? What that means is that I'm going to pay taxes now, but I do not have to pay in the future. Roth, our IRA Roth for a one k those air saying okay, pay taxes. Now, don't pay him in the future. And then a regular for a one K or a traditional IRA. What that says is Look, you don't have to pay taxes. Now, lower your taxable income, but play pay taxes in the future. Which is better for you, I can tell you that because I have no idea what tax rates are gonna be. 10 2030 40 50 years from now, whenever your retirement is OK. My retirement fish. I don't actually plan to retire, but my retirement ages 30 years from now, right? So in 30 years, what I think tax rates are gonna be I have no idea. So what will I do? OK, so I diversify away from that risk, which I talked about a lot, right? Diversification leads away from leads to lower riffs. I split my tax, my savings into two different buckets into a pre tax and post tax in my pretax savings. Okay, so that's my 41 K So I get a 4 57 in a 43 B. I put $3000 a month into that. Okay, so 3000 goes into pre tax, and then I save $1000 on top of that, into a Vanguard account similar to the betterment account. War exists in the S and P 500 index one. So I say $4000 a month and I split into pre tax and post tax for me. I don't plan on retiring early because bringing like bringing money is so much fun for me to work on. These lectures are really great. So I'm not worried about taking my money out now. I don't need the money right now so I can put him into a 401 k in my 4 57 and not have to worry about it. Okay, so if you're trying to retire early, maybe you are. It's a little bit different tax situation for you. So again, everybody has considered their own financial situation to determine which one's better for you as well as what do you think Feature tax rate, your future tax rates gonna be. I have no idea what's mine is gonna be. So that being said, that's how you split your savings into pre tax and post tax and part of the advanced class . 10. 15a 401k and 457b Basics: Okay. As part of this advance personal finance class, I've been asked by a lot of students to cover for one case for 57 bees for three bees, which are for government employees and nonprofits, respectively. But mainly for one k. Its options how to choose from all the all of these options. On average, companies allow 19 different options from an employee to choose from. So I think this is a really important part of this class. I'm not gonna dive into a ton of detail, but enough details where you feel confident on what to do. It's like my investing class, like we learned enough theory so you could start investing 10 or $25 with betterment and not feel afraid. That's what I want to get you to, for this is, Well, that's my goal. So with that being said, let's get started. So the 41 K basics. Not everyone has a 41 K at their job. If you do, you feel very fortunate because not everyone does have a 41 K at their job. All contributions are tax deductible. What does that mean? It means that I'm going to be taxed later. Okay, Right now, it's gonna decrease my income. So I actually pay less taxes today. Remember that anything that starts with Ross like a Roth 41 K needs You pay taxes now, but you don't owe taxes in the future if you withdraw it early. Any money in your 41 K there's a 10% penalty, and you pay regular taxes on your withdrawals. That's taxes income, so you get hit with a 10% penalty. Um, generally, companies will offer on X percent match 3 to 6%. And as we said, you should contribute at least this amount you select from a limited number of fun slash options. Usually like between 19 and 25 options. You can choose whatever you want, so that's kind of a limitation with the 41 K And we talked about that during this class is well with the traditional IRA or with Roth IRA, you can choose what you invest in with a 41 K You have to invest in whatever they allow you to invest in. So there are many hi fi options. So the company offering the 41 K can actually make money off of U. S. So you always have to think about incentives you have been. Watch my debt class. Think about a banks incentives. Will you want your incentives? What is the company offering these retirements plans? Incentives. And so you have to watch out for those hi fi option. So stay away from those to hype the options. I'll go through some examples in a second here. So what about a 4 57 B? I wanted to, at least at this, skip over it. If you don't even aren't offered a 4 57 B eight jobs. This is for local and state government employees, so it's like a 41 K for government workers again, you can skip it if you don't have this option. All contributions are tax deductible. You pay tax later when on when you withdraw it. A. Roth 4 57 b means you pay taxes now, but don't owe tax in the future. Remember anything that says Roth means I'm getting taxed now, but not in the future. So if you have the normal 4 57 B plan, if you withdraw in early, unlike the 41 K there is no penalty so no penalty, no 10% penalty on taking the money out early. But you do owe taxes at your current tax rate, so you still pay tax that your regular tax rate again. Most governments will offer an X percent match, so $1000 a year whatever they should offer some sort of map. So that's what you should contribute, at least that amount. Same thing with the 41 K though with 4 57 you select from a limited number of funds and options. You can choose whatever you want. There are many hi fi options. So the company offering the 4 57 beacon make money. Like I said, stay away from all hi fi options. So with that being said, that is the basics of 41 case in 4 57 bees. 11. 15b 403b Basics: So here's some 43 B basics. Again. Skip this. If you're not available for a 43 d, so they're going to the slide only available to nonprofit slash educational employees. All contributions are tax deductible. So just like a 401 K you pay taxes later on when you withdraw it just like a 41 K There's a 10% penalty if you withdraw it early on, and you awesome was pay your regular tax rate if a match is offered. Contribute to that amount. Like we've said, repetition is key. You select from a limited number of funds. Slash options. You can choose whatever you want. There are many hi fi options, so stay away from those hi fi options to other things I want to say is one non profit government employees may be available for both a 43 d and a 4 50 70 In my situation, I can contribute up to $36,000 a year. 18,000 and 43 B in 4 18,057 Be because I worked for a local on non profit here in Houston. So something that you should consider is if you are working for an educational, nonprofit or government entity. Can you contribute to both? Ask your HR department. The last thing that we didn't talk about our loans from your 4 57 B or 43 beer, your for a one K. OK, so, yes, you can take out loans. I do not recommend doing that because you're didn't your dipping into your retirement pot. So with that being said, I just want you to be aware that there are circumstances in which you can take out the money early, through alone or through circumstantial hardship. I'm not gonna cover those right now, so 12. 16 Savings Wrapper and Pre Post: So now we get the savings. Rapper. Right? We've seen this. You start here, you end here with the emergency fund and betterment or some sort of after tax savings account. So we just talked about pretty imposed tax. Let's talk about which one of these accounts are pre tax in which one of these counts or post tax. So that being said, look at the slide here. Post tax tax now is your emergency fund. It's your debt. You're paying taxes on those things right now. The next one is your Roth IRA. I'm only focus on the Roth, not the traditional to Roth IRAs. Tax Now and then your betterment online savings, your post tax account, those air all tax right now. So on the other side, you have pre tax, which is tax later. You don't have to pay tax now, but you have to pay taxes later. That's gonna be your 41 K or your 4 57 b of your government work in the United States. It's also gonna be your traditional IRA or your other section of your for a one came. We split it out into the match and then just filling up that bucket. Those are gonna be pretax, right? There's gonna be taxed the later on. So again, this life presents to you our savings rapper. What's gonna be post tax and what's going to be pretext? 13. 17 Other Savings Accounts: so we're gonna hit now is creating other savings account. We talked about 401 K Every time you increase, you get a raise to increase 41 K contribution. I'm not gonna get that again. That prevents lifestyle invasion inflation in the same thing with increasing your tax withholding prevents lifestyle in place. You One other type of savings account that we haven't talked about today is your HS a health savings account. You're only available for a health savings account. If you're in a high deductible plan, which is I am. Why did I choose a high deductible plan? I'll go into that very quickly. I don't know the doctor very often. Okay, I don't need it. I say very healthy. I pay $230 a month for a gym membership, But I don't go to the doctor. I'm not really sick, and I don't have a lot of health issues. Okay, so remember that you don't have to use that money. If you do have a HS account, I invest mind in the S and P 500 on, and I'm not gonna touch it for a very long time. This is seriously Justin emergency account When I do go to the doctor. Okay. If I have to go to the doctor for anything copays or anything like that, I'm actually just had LASIK about a month ago, and that allows me I could have used my HSCEI for that. But I have the money now, so I'm gonna save it for a time. Maybe when I take another year. Often I'm not working or when I actually have a financial emergency, which, you know, I can't I don't have enough money in my current account, so I pay for all my medical cause out of pocket. But just remember that you have NHS account, which you could invest on DNA, not have to touch at any point, as long as you have qualified expenses sometime in the future. I think just a accounts are really, really cool. Really, really great. Not everyone has an opportunity to invest in them. So if I had a family, I think it be a little bit different. I don't think I would go with a high deductible plan if I had multiple kids. Right. So, um, again, I'm gonna go through Warren Buffett's quote because, you know, how much I respect Warren Buffett. My advice for all your investments is my advice to the trustee. Couldn't be more simple. It's so warm. But quote put 10% of the cash and short term government bonds and 90% in very low cost S and P 500 index fund. I suggest Vanguard's This is again buffet talking. I believe the trust long term results from this policy will be superior to those attained by most investors, whether punching pension funds, institutions or individuals who imply high fee managers. And Warren Buffett actually made this bet against hedge fund managers and then want that, he said the S and P 500 index fund, which is just a low cost people do better than these hedge fund managers. And he won. He was right. And so this is my advice. We do this through betterment eso take by investing course where we invest in Bangla funds through betterment at very low fees. You can investors Lewis $10. So again very, very important that you understand this so that being said, let's move on to the next line 14. 18 Tips on Income and Exp: So one thing that we talked about, What network is that? Sometimes you have to make more money to increase your network. Okay, so I've gotten raises of the past, are picked up different jobs. So I wanted to do some quick tips on increase your income or decreasing your expenses. So the first thing I'd say is get a side us right, Go to brainy money dot com and explore side hustles under products in products. You'll see what side hustles that we have for you that you can look at uber up work. I use upward for making the course images on this class. I used up work to find our editor, a curator for bringing money dot com. So you were on their Maybe I would have talked to you, right? So that's a really good website. Airbnb. There's so many things that you could do to get a side hustle, a big here big point here. Stop buying a bunch of stuff and sell any extra stuff that you have. Don't accept free items if you don't need, um either right that that creates this mentality and I need more stuff. I need more stuff. What think that picked up is not real minimalism, but I don't buy a bunch of stuff anymore by high quality parts, and you'll see all of my videos. Now we're the same blue shirt. I am five of the same blue shirts. Now that takes away decision fatigue, which we'll talk about later. But I'm stop buying a bunch of stuff. And if you need more ideas, check out bringing money dot com. I think that is, has really good resource is for you theater. Part is, you know you have a full time job. Work harder there, learn new skills, learn excel, better oven Excel class out there. But there are other Excel classes like Learn your skills better, and when you're able to do that, you'll be able to get raises later on. So tips on increasing income obviously, war Carter. That's the general theme of this and that decreasing expenses Stop buying stuff. That's the general theme of this. Easy to say. Hard to do. Start training yourself just like you would train for a marathon or some other sporting event. You gotta train your brain not to do these things, because finances mostly psychological. Okay, we are irrational, which we'll talk about later on. But we are irrational, were not objective. We are biased, and that's OK as long as we recognize that we are doing those things. So those your tips for increasing income. So with that safe, 30% and then allocate that to your catalyst, your callous, maybe something else, right? And I listen to other things. I have saved money so I can't so on your hand out right. Why you need to save money? What are you trying to save money for? For me, it's financial security. It's not early retirement. It's just straight up financial security. That's the only reason why a save money so I can explore things like this. I could fail, which I'll talk about that in a second. But I could take risks, right? And so that's what my financial security allows me do. It allows me to take risks without really having to worry about it. Um, so send your kids to college. Could be one of those things so allocated to your catalyst and write down your catalyst. I think that's really important on your hand. 15. PFA 18a Lifestyle Inflation: So what? To stop you and talk about lifestyle inflation. I think this is really what gets us in the Western world again. You know, basically United States and eso. I see a lot of what happens in the U. S. S O. This also probably happens in Western Europe as well. So what we see in North America and Western Europe is this include lifestyle, inflation. So what is it? You can read the exact definition below me, but what it essentially means is that for every raise that I get, I just immediately spend it. So I get a 5% raise now. My spending increased by 5%. I get a 10% raise now. I'm driving a luxury car. I get another 10% raise. I'm selling my house and biting a bigger house. What that creates is this inability to Correcto say, for a long term financial goals like retirement, you can't save it all because that gap stays exactly the same. Say you're saving 2% a year. Can you get a 10% raise? And then now you're spending increases by 10% right? And then So there's the gap is what we're really focused on the difference between our earnings and are spending. We wanna widen that gap to as much as possible. The best way to do that is increasing earnings on decrease our spending or keep the spending the same. So something that I've been very good at this is one thing On tout about myself is lifestyle inflation. I have a $13 watch, so I don't have lifestyle inflation with myself, because I've been able to say, Look, I don't want that nice car. I don't want this. I'd rather be stress free. And the one thing I would reiterate is the reason for this class is financial security and living a stress free life again. We're not trying to become billionaires here. All we're trying to do is spend more time with our family and friends and live a stress free life. In the way to do that is don't let lifestyle inflation creep up line. That's generally how it happens. You get a 4% raise, a cost of living adjustment and then now your expenses increased by 4% automatically. We're gonna find out ways to prevent this from happening. The two main ways, which we talked about at the bottom is for any races that we get. We increase our 41 K contribution by that same exact amount, so that way we never see the money. Another way to do that is the increased tax withholding. I get a 10% raise, I increase, and I just happened with me. I increased my tax withholding by 10% with that allows me to do is prevent lifestyle inflation. I never seen my paycheck kal up. My paycheck is exactly the same before my 10% race. And that's how my savings rate is so high. And that's something that I want to teach you about is how to keep your savings rate high or increasing savings rate by avoiding lifestyle inflation. So again, lifestyle inflation reversed. Increasing is one spending when their income goes up. So to prevent that is, don't let yourself spend that additional money, keep it away into a savings account, opposed tax savings account or increasing your 41 K contribution or your tax withholding again, that is lifestyle inflation. If you can control lifestyle inflation, you won't have to live paycheck to paycheck 16. 19 Invest in Yourself Fund: Okay, so I want to talk about something here today that not many people talk about on dso It's Everybody talks about emergency fund, right? That's not the first time you heard about an emergency fund, but I want you to create an invest in yourself. Okay? The size varies on future gold. But think of it like if you want to go to grad school going, eh? NBA or something along those lines, that's what and invest in yourself fun is for it varies in size, right? So I'm not gonna go get an MBA. I don't need to have a chartered financial analyst and the sea pay, so there's no reason for me to go do that, right? So no more investments in my school. But I do invest in things that I think are cool ideas, and I havent investing yourself fun to do this. What this means is that it's money set aside generally around 3 to 5% of your income to go do stuff that you wouldn't normally do. Okay, So for example, let me give you a couple examples. I wanted to start a company. Now I have money to do that. I don't want to invest in Bitcoin because I think that's a new cool thing. You know, that's OK, but gambling. So use that investment. Invest in yourself. Fund. Right? So these are things that you can invest in yourself. You could buy equipment. You can make videos. You could make music whenever you need to do this is your investing yourself fun. And I would keep it at that because this is kind of a gamble, right? Investing yourself. Yes, that's really important. But this could not so not work out. So why not spend your entire life savings of, like, $200,000 to start a restaurant? Maybe. You think that's a great idea? I wouldn't take that kind of risk. Um, so it's also good for Mary Couples. Some more people have partners is like, look together. We're gonna have this money and investing yourself on. Either of us can use it, but nothing more than that. Okay, that way you don't put yourself in financial jeopardy. You want to stay away from those precarious situations and gigantic mistakes, and so these maybe mistakes and create failure, and that's okay. But it's confined to that just small amount of money. So investing yourself. So let me tell you my investing yourself fun in my failure fund. I failed a lot of times over my career. I use my investing yourself for him to try to make company that made travel us. That's for you. What you can see below me. It fell flat on its face. I read this book called The Four Hour Work Week and in that book and talked about drop shipment and going to China and alibaba dot com and all this other stuff like Old Man got really excited. I was. I did it. I felt like $4000 nothing came out of it. It's not as easy as you think it is just like anything else. And honestly, I was just not that passionate about it, like you can see the passion when I talk about personal finance and building brainy money. But I was not a passion about building these travel accessories. I thought was a cool idea. But if you asked me to work 100 hours a week on it, I would bring the money. I'm coming home. After working 60 hour weeks and working on this on the on the company on the Scient, making it better for you because I care about it because I know can make an impact on your life. Travel accessories. Maybe, Maybe not, You know, making impact on your life. So anyways, long story short is I wanted to confess to you my students in my peers, that look, you know what everyone fails, including myself, my network that still formed or $6000 after all this. But it's something that I learned about right. I was in Shins and China looking for suppliers, walking around, not knowing what the heck's going on. And it was really tough. But a big lesson learned. But what I did was I couldn't find it to that $4000 I said, Look, that's it, I'm out. It didn't work out, and that's okay. But what I did learn with some real life business lessons. So that being said, that's my spiel on investing yourself 17. 20 Auto Savings Conclusion: So this is one of the slides that might make, um, large and full screen so you can see what's going on. So this is our conclusion Toe fully automating their savings in your investing. So let's get started. You have a paycheck. Come in. Right. So where does that pay check up? First, it's gonna go to your tax withholding in deductions, deductions for health insurance and other things and tax withholding. Going to the ire s right. The next thing you should do is go into your 41 K If you have a 41 K it should definitely be going into that, at least to the math percentage by your company. Then you have savings accounts in the savings account. You have an emergency fund to 12 months. Remember, Go back to my slide. If you don't know how much you put in there, invest in yourself fun. Roughly 3% of your income. Because I think everyone deserves the opportunity to invest in themselves. And then I raise index funds HS a better man account. Okay, so many, many options here. But it is going into some type of savings account as well. Right? And Then you have your checking account, okay? And that's on your spending and bills. So this amount is 41 K and the savings account should be 30% savings. Okay, that's what we're trying to get to again. It's gonna be tough to get to that right away. Which is why we have the advanced class versus beginner class. You can hit the beginners pretty easily. Now you're at the advanced course, and now you're trying to get to 30%. It's not easy. Right? But anyway, so now you have your 41 K and then in your savings account, you have your emergency investing yourself fund. These were two funds, and then after tax post tax savings are here. So that being said, the last thing I will say is to remember to for your tax withholdings, increase those and then put them back into an emergency fund investing yourself fund or your IRAs, index funds, or HSCEI last like betterment accounts because up here, yes, you lose impossible interest, but you avoid lifestyle inflation. And that is such a key again, is avoiding that lifestyle inflation. So again, this is our conclusion. Slide on a fully automated savings and investing point 18. 24 Core Principal 3: the corporate school number three create more than one source of income. What when I hit here is like you're going to see this quick graph young millennials take side jobs to earn extra money. I'm a millennial. So that's why I put this graph out. They're not for everyone this infographic, But look, 96% of people having millennials have a side job that makes extra income. Why is that important? It just shows you that diversifying away from risk is an important item to think about. You know, maybe you will want to do it, but at least understanding, I think it's important to do it. That's my contention. And that's why I say it's a core principle. Number three. So theatrics Millionaire has seven streams of income. Okay, generally do like real estate through passive investments like the S and P 500 index funds . Stuff like that, multiple businesses that they own. I know several millionaires and they have their own, like eight different businesses. Okay, and then they have their full time job. That is also their business. So the average millionaire has seven income streams. You kind of want to get there for me. I have foreign countries. Nine. Not a millionaire, as you can see. So what kind of sources of income do you have? You could get freelance work. Are freelance jobs on up work I used to build. I use this to build this course and a lot of the graphics and a lot of the editing and stuff I use upward. Uber etcetera will allow you to do that as well. That's a freelance shop rental income Airbnb finding jobs on Craigslist, investment income through low cost index funds, royalties. I get all of my music from a website called Yummy Sounds, Part time jobs, Starbucks, etcetera. And the last thing is like dog walking house sitting. And there's like a website called rover dot com, where you can do those things and maybe you don't like to it working with dogs and you enjoy being around them, and now you can get paid for them. So it's a really cool to create these sources of income. Okay? And we have this on our part outside of our brainy money, which is why I'm supportive. A brainy money, cause it gives you all this information without forcing you in any certain direction. So here's the key. And you're gonna block of this when I tell you that's the key to other income sources. Okay, I'm about to tell you eso the key is you got to do it for free. Okay? Start doing it for free if you don't do it for free. You don't know if you're good at it. You may. Everyone thinks that they're the best cook, you know, or they're the best. This or best that you don't know until you actually go do it. And that's something I learned about my courses. I thought I was okay when I post them. When I got 60,000 students and forms in them, you started tracking meals like, Oh, wow. So it must be okay. This right? But they're definitely things I could get better. My first class from personal finance. I was doing this in cold, cold therapy without going on too much of a tangent. But I was actually sick on it. Okay? So you could tell him not sick here. I'm not sniffling. Stuff like that. My courses are better. I have a better camera. Better video editing equipment, hiring people to work with me now, so it's a lot different. So start doing it for free. And why do you want to start doing it for free? Like, what are you talking about, Sun? Like I do this for free. Free works creates very low expectations. Okay, if you suck, it doesn't matter. Okay, because it's did was done for free. You may lose some credibility with somebody, but it doesn't matter because you're doing it for free. It helps you determine if you really want to do it. Okay, So these online courses, if they did well or not, I still want to do them. Because if it impacted, just once, do this life, OK? And I read my reviews for personal finances. And there's so meaningful because students are impacted by what I say that have 16 and 17 year old kids who are off to an amazing start because I watched my class. I wish I knew what I do now when I was 16 or 17. And that, like that rings true to me. Okay, that's a value on a mission that I can stand behind. I will do this for free as long as I want to do it for free on. I love it, you know? And so, you know, luckily, I get paid for it, but I would definitely do it for free because it changes a small part. So that being said, build your skills while you're doing it for free. OK, So when I was doing this for free in Berlin, I was learning how to video. And it even better how to get the right shots in the right sounds and the right lighting. All those things I was learning as I was doing it for free and creates a network of people that like you. So you're doing it for free for these people in their house, son, you commit. You did it for free. Next time I need something. Definitely. You don't call you and you're not taking advantage of anyone. You're doing it for free. So again, without going to too much detail, you could tell from this class that, um, that one. I'm passionate about it. But look, I did this for free. 2016 and I left him free for two years just to see how they would do when they got 60,000 students. Forbes amused as I talked about. But the main thing is look, I knew that I was actually OK at this and that the research that I had done so many hours of research on personal finance and living in showing you my story really does make an impact. So again, do it for free. I think that's a really great way to start. You won't hear that from very many people. But I'm telling you, I know what I'm talking about when it comes to this. 19. 25 Invest in Yourself: so investing in yourself, using your invest in yourself fun, right? We talked about your investing yourself fun now bringing back together kind of closing the loop. This may take an initial investment. Generally, it will take time and money. Okay, Not always money, but it will definitely take time at all points. Making these horses took time. You may need to learn a new skill or several skills. Okay, So one thing I'll tell you real time. We're trying to do that weekly Q and A. I'm working with my developer. Build that on our site and then I'm working to try to do that with our canon rebel t seven I. It's not as easy as you think. I'm still amazed by all these young kids on YouTube. We're doing like lime YouTube live and all this stuff. I don't know, it's tough, but I'm learning how to do it. It's a new skill that I'm building. Okay, the thing you see behind um I made this. Okay. I thought I really like woodworking, but it took me three hours, tons of sweat. It was tough. I don't like it that much. What? I do this more often No, but I really enjoy having this one because I created it. That's just an example of something that I needed to do toe learn a skill to see that if I wanted to do this for a side income and I did not I by myself off etc. I'm sitting on a bench right now from etc. Another website that opposed on brainy money to sell the stuff that you are really good at on dso i This this bench I'm sitting on is reclaimed wood from Chicago. Really, really great on Guy paid for that because I believe in, you know, they protecting our environment. But I also believe in supporting local artists, and I believe this is a type of art local artists in the United States or elsewhere. So you may need actually buy some equipment on this year's that you just suck at it, okay, But I think it's still way better than going to bars. Okay, The $4000 that I spent on Abby ona that travel company that tried to make about travel accessories was way better spent there than on going to bars and getting wasted in party. Okay, so those are things that I will say, I think are very, very important to understand. So that being said, that's the end of this lecture. 20. 26 Core Principal 4: So now let's talk about the fourth core principle of personal finances being banned side right is start enjoying life today. You're in a good spot because if you've done these four things, the 1st 1 is paid off all your high interest rate debt. Okay, so you just have your house, possibly a car loan left at a low interest rate. You've done that. You have a positive network with an emergency fund, your saving at least 5% of your income. And you know how to create incentives and meet your financial goals than what you're ahead of the game. Don't rest on your laurels, but it is important to understand that look, tomorrow is not guaranteed and that you have to enjoy life on. And that's something that you'll hear me say a lot, because again, it's not guaranteed. There's so many things that can happen. And so it is important to enjoy life. So one interesting fact. If you have $10 in no day, okay, you're richer than 15% of American households combined. So if I combined those 15% your $10 worth more than what does that really mean? It means that 15% off. American households actually have negative network. Okay, which I Was it all right? I had negative network. So I know what it's like to be in that situation. I was part of that. Um, So now what I'm trying to say is that if you have $10 no debt, right, or if you have a positive network that we go back to the previous slide, you have a positive network with an emergency fund, your ahead of the game. And that's what's so important about this course in my previous course on why this membrane the money is so important is that we can join together and accomplish a goal. And the goal is to have a positive net worth and this save 30% of their income to keep increasing our network. Okay, so that's something that I think is really important. So where do I enjoy life? Okay. You're likable, son. You work a lot of work in the capital markets. You sell public bonds. You do. This is well, when do you take time out for yourself? And I think that was a really important question, right? So my answer is that where I enjoy life is I take professional surfing lessons I have a coach on and I'm not that good. You could see my pictures. I'm okay. Anyone who really starts, we'll see that. You know, I don't shred like other people do surfing term, but anyway, so I'm not that great, But I still spend $3000 a year on surf lessons. I spent $12,000 a year in total traveling, and that's where I spend most of my discretionary money. I don't own a house. I don't have really fancy car. I drive a Jeep Wrangler that's on it. That's a stick shift. Not even automatic in this watch is $13. Okay, I have five work shirts. I look exactly like this. You watch all my videos and wearing a blue shirt on this where I work. Where to work every day essentially have a uniform, so I don't splurge on those things which you'll see. Here's a picture of me surfing in Costa Rica. I do love that. I have friends in Costa Rica, Ala Ric, Rachel, Eric. I've still good group of friends down there. I know their kids, and I know their families, and I'm still lucky to have friends in Costa Rica that I can go down there, speak Spanish, take Spanish classes if I want to build that skill. Hopefully I'll teach you some of these costs in Spanish at some point. But this is where I enjoy life, and you should find that too. So the key lesson here you'll see red, is that you can't splurge on everything. Okay? I can't drive a nice car, live in the nicest house, and then go to Costa Rica. Maybe some people can, but you have to make choices. And the toys I have is that you can't splurge on everything I am choosing wisely and my choices that understand more money on traveling that I do want other things because surfing , living in Costa Rico once a month and traveling another month out of the year. So I love living in the United States, but living here full time isn't for me. So I'm trying to expand that to, like, 34 months out of the States and probably eight months in the United States for months outside. But again, this is where I enjoy life. I think it's important to tie it back to who I am, because in the embracing money is about people. It's about you. It's about building a community in the only way to do that as be vulnerable. When I showed you my network, which was scary. And now I'm talking about this on showing you Look how much I do. I really spend on surfing and traveling. And so it's a big amount of money, right? But again, my Jeep Wranglers a stick shift. I don't drive a nice car stuff like that. So that being said, that's where I enjoy. 21. 29 Pitfalls of PF: so like a lot of my classes. I'm gonna cover this, but I'm gonna go. I'm actually create a separate class that will dive into the details of this because this is actually behavioral finance, but I wanted to bring it up. So why did so many people fail? This is simple, right? I tell you to earn more than you spend. But it's really hard, right? Like working out and eating healthy is a cool is the best way to be healthy, right? Yeah, obviously. But it's really hard for us to do. Most likely gonna go a chick fil A after this. It's because we're irrational, okay? And that's okay. We're rational. And that's totally fine. Here's some steps that here is something that we fall into the 1st 1 is a cognitive overload. Okay, that's why automation so important And why do certain other things but automate my savings and my investments is still important because I can't make that decision. Once I have to make that decision, I'm gonna make the wrong decision. So I automate all of those things. And then why were the same blue shark to work every day is because of decision fatigue, which I said that we were gonna bring up decision fatigue is to buy, actually, 1000 questions every day before you get to work. By the time you get to work to make hard decisions, you're not gonna be able to, because essentially you're exhausted. Empathy, gaps, empathy, gaps is about how we have different personalities. OK, we definitely do think about the times that you're angry, right? That's a That's a very your word that people understand, right? You're angry or you're hungry. You're mad and you're angry, and you're not gonna make the same decisions. There was your sleep deprived. Okay, so understand that. Understand that. Look, you are a different person when you don't eat or sleep enough. Think about babies. Why they cry when they're hungry. Because they're upset. And that's it. Okay for us to get upset. War hungry. Which is why I'm gonna go check later on after I finish this lecture. Optimism and overconfidence. Okay, so, yes, a lot of people are very optimistic, and it's good. Be optimistic. I am. But I do know that rainy days we're gonna come, which is why I have a $400,000 network in an emergency fund of four months, right? Till prepare for and then follow Warren Buffett's advice, which is essentially, you don't know that much. Which is why we invest in the index of S and P 500 index. Instant gratification don't just buy things on this plot, okay? Try to make a list I gave you a little and out. This is gonna be really hard to fault. Maybe just think about those three questions and I give you why do you feel like you actually need this item? Okay, it's tough. You can always, like, rationalize. I need this. I need this. I need this. And maybe you don't. And that's just think about it as something to avoid. Loss aversion. Great spending creates over spending habits. What loss aversion is is like, if I don't buy that super nice shirt, I'm gonna regret it, right? And so we'll go into more detail about that later on, but only use cash like I talked about credit cards, paying them off every 2 to 3 days. That's really important, because I used it like cash. But if you you can't even do that, just use cash. Forget the rewards. Forget all that stuff. You overspend like crazy gestures, gas and then social norms. Right. We talked a lot about societal norms in the first class, which is very interesting to me. Behavioral finance and just societal norms and human behavior and social capital is all really interesting to me, but social norms. So like a study in Holland showed that the neighbors, people who won the lottery have on the higher likelihood of buying a fancier car, a new car because you're impacted by the people you liver. Which is why I like you're buying a house by really nice house. And you have a really nice car because everybody drives really nice cars. They're not driving civics in 2000 cameras with linke sunroofs. These all in back your decisions. So just know that social norms have a big impact on how much you spend because a lot of people watching this last have enough to eat, have a roof over their head, have all the necessities truly in life, that they need one thing. Then I'll end with this John D. Rockefeller. Does everyone know who John D. Rockefeller is? He was the richest man in the United States in the early 19 hundreds. We all live in better living conditions than he does the needed. We have air conditioning. We have cars with their conditions in them. We have live TV. We have Internet. So we live better than John D. Rockefeller. Keep that in mind. Somebody told me that once. I think that's really important. Say, at the end of this class, is that John D. Rockefeller? We live better than him. So when Maybe you don't have his nice car as John Doe over there. But you know, who cares? It's really just to get your point A from point B. What you don't know is this John Doe sleep well at night? Because if you don't have a lot of debt, you probably do, and he probably doesn't. So just heads up on that 22. 30 What we learned: So this is the conclusions line. First, let's cover the core for the advance court for focus on your building, your network by automatically saving 30%. Learn more about personal finance and we created a website So you can do that. Bernie. Money dot com No ads, no affiliate leaks. Love that. Um, I really love that about us. Um, great. More than one source of income. So we talked about that on Brady money. We talked about that during the class, and I'll give you tips on Brady money again. No affiliate links on. Start enjoying life today. Tomorrow is not guaranteed cancer. Can't emphasize that enough. You never know what's gonna happen so enjoy life today.