Transcripts
1. Welcome to Class: Hello, ladies and gentlemen. My name is Kyle has slipping, but what I'm here to
talk to you about now, today is something that I really wish I knew
about when I was, let's say in my 18 to
20, six-year-old age. And that thing is called Fire. It's a movement that a lot of people would
become involved in. And fire stands for
financial independence. Retire early. Amazing. So I have a
couple of questions for you and let's just get
into this introduction. Number one, are you confident about your
long-term future? And do you have solid plans and investments that will provide a high quality of
life when you retire. Have you ever been seriously thinking about
your own retirement? When I was young, I didn't think that was true, but little did I know. Luckily, I am implementing the lessons I'm going
to teach you here. And I have been for a while and they have made a difference. Well, what if I told you
that many people are working on a special plan that would allow them to retire
in their 50s. Good. How about their 40s better? Yes. How about even in their 30s? Know, a lot of people
are able to retire in their 30s if they
implement these soon, which I expect you're
probably around the ages of 18 to 26. Now is the time. This is a fact that no,
it's not fiction. And the sooner you
understand and start this special
concept of fire, then the more likely you can
achieve an early retirement. You know, where you
could live abroad, almost anywhere you may like. You can choose possibly to
work or not after retirement. You maybe never, hopefully, hopefully never have the
fear of losing your job and have the time to do
the things that you want, they're important to you. Now, this is not a guarantee, but this is what a
lot of people are able to do and they're
accomplishing this. It's possible, but it
does take commitment. Now, there's an entire movement, as I said out there, dedicated to just this
particular thing. And again, it's called fire. Financial independence,
retire early. Now, Investopedia defines
this particular movement, fire as this financial
independence retire early, is a movement dedicated
to a program of extreme savings and
investment that allows proponents to retire far earlier than
traditional budgets and retirement plans would allow by dedicating up to
70% of income to savings. Followers of the
fire movement may eventually be able to
quit their jobs and lives solely off small withdrawals
from their portfolios. Have I got your attention yet? Would you like to know
more about how to reach this level of financial
independence for yourself. Well, I have curated nine particular steps
to share with you that will help get you on your way to a more financially free
and exciting future. So what do you say? If you're interested, which
I expect you probably are. Go ahead and go to
the next video.
2. A Positive Attitude: Okay, so the first step and initially perhaps the most important step is to get yourself in a positive mindset. Now, hold on. Some of you may be rolling your eyes thinking that this isn't a practical step. Perhaps it isn't a true money related process to follow. However, that couldn't be further from the truth. Everything we do, consciously and subconsciously, is directly related to our minds and our attitudes and our perceptions. Did you know that the number one driver of decisions is to minimize discomfort that holds true with money decisions to Do you remember any major money decisions that you made in the past? Well, if you think hard enough, you should be able to identify some underlying discomfort you had when that decision was made. And afterwards you had some sort of relief after making that decision. So be mindful of your attitude. If you can create and keep a positive mindset on money, then you will already be freer and well on your way to financial freedom. So in this video, we're going to go over to specific areas. Number one. We're going to go through an easy activity together to build up that confidence and that attitude and help minimize some some of your financially mental discomforts that you might have. Second, I would like to give you six ways that you can help instill a more positive mindset on your own finances before we move on to the meat and potatoes of this course. But before we begin, I'd like you to get out of notebook or even better, a journal that you could dedicate to this course. We're going to take a few notes and make a few personal entries throughout these lessons and afterwards, as you continue on your own financial fire journey. Okay, let's get started to begin with are easy activity. I'd like you to get out that notebook journal or just in paper to begin with if you don't already have a notebook or journal to dedicate to this course yet. But don't forget to get one on a fresh piece of paper, give it a title such as financial struggles or something like that, and then take a moment and list as many financial money related difficulties that you're having at the moment or that you regularly have in life. What struggles are you facing that are financially related. Go ahead and push. Pause now and make that list. Okay, go ahead. Push. Pause. Now, Now that you have that list, can you think of any possible solutions to your financial challenges? You may be able to only think of one for each, perhaps several for some of those, and perhaps none for others. That's okay. Don't worry. We're just getting started here. Take a moment and try to think of those possible solutions and then jot them down on paper . Go ahead and do that Now. Push. Pause. Great. Now, on a new piece of paper on a fresh piece of paper, organize them in priority of what you feel are the most important at the top and the least important at the bottom list. The most important struggle as number one, the next most important struggle as number two and then under each of these struggles right down the possible solutions that you've already written down on the previous page under each of them. Do that with all of those struggles. Now on on that fresh piece of paper. Go ahead and do that Now. Push, Pause. We're not done yet with this. Whether or not, you were able to think of solutions. You can bet that many others have had the exact same struggles that you do now. Let's learn from their experiences. How about that? Did you know that there are several groups out there that are dedicated to the fire movement? Yes. If you take a moment to search, you should be able to find several of these groups. So now you know that there are several fire groups out there waiting for you to tap into tap into their knowledge. I'd like you to reach out to these groups, ask people for a little bit of help. You know what? Let me share one of my favorite quotes with U goes like this. Of all the successful people out there, 100% had to work hard, and 0% did it without the help of others. So don't be shy. Get some help from others, get help from others who have been in your shoes before. Once you've done all this, make a symbol plan on what you can do to start addressing your financial challenges today. And make sure you write that down just as we've done now this will help give you more peace of mind in the right attitude as we progress further for the second part of this video, I'd like to share with you six ways to help instill a more positive money mindset. So let's get right into it. Number one. Forgive yourself for past financial mistakes. We're all responsible for our mistakes in life, and we all make mistakes. You can't change the past, but you certainly can learn from the past. Make those mistakes a learning opportunity so you are stronger and smarter in the future. Free yourself from this guilt that really doesn't serve you in any way and free yourself to make better decisions today and tomorrow. And that's really what you're doing. By watching these videos right number to be self aware of your money mindset. This means that you want to better understand what drives you to make your money decisions . So the next several times you're about to purchase something or make some type of money related decision. Step back. Take a look at what your emotions are. What's going through your mind. This simple act of trying to be more self aware can put more perspective on your current conscious and subconscious attitude on money Number three. Don't compare yourself to others. No matter who you are, there were always be someone who is seemingly doing better than you, and there will always be someone who is seemingly doing worse than you. That's life, right, that's natural. So be aware of that and accept it. The only comparison that really matters is comparing yourself to yourself. Are you better today than yesterday? Are you making the effort to be better tomorrow than you are today? Keep your focus there. Number four. Create and keep good habits. It is usually not one particular decision that brings a person successor failure. It's the accumulation of several habits that put a person down a certain path, get rid of the bad habits and keep the good ones. Simple idea, Right? So what are your money habits? Do you track your expenses? Do you keep a budget? Do you pay your credit card and your bills on time? Do you commit an hour a week to review your finances? Now you probably don't on some of these. That's natural. Most people really don't, but you can change that. Be better than everyone else. So if you don't do all of these, you can start now and we'll get into how to do some of these really simple number five. Optimize your budget for happiness. Now most people cringe at the word budget. I know I used to. I actually am guilty of this in the past. But once you get a little familiar with a budget and having your own simplified version, you can actually start to feel more empowered and in control of things. Just simply knowing where your money goes on a regular daily basis is really eye opening, and it puts your mind in a better place that helps you make better spending decisions. And as I already mentioned, we'll look closer budgets really soon. Number six. Be grateful. So practicing gratitude may not be directly related to finance, but it does have a significant effect on your money. Try writing down one thing each day that you're grateful for in your journal. Remember, get that journal. Just give it a try, and as you do this, your attitude will brighten and a positive attitude leads to positive outcomes and in areas of life. You would never have expected. Okay, so we've gone through a simple activity of understanding your financial struggles and making the effort to identify solutions. And then secondly, we talked about six simple ways that will get you the right positive mindset for a brighter financial future. Next, let's look at an amazing concept called Pay yourself first and how to budget for it.
3. A Pay Yourself First Budget: Okay, ladies and gentleman, in this lesson, we want to basically do two more things. We want to get you in the habit of number one recording and tracking your expenses on a daily basis. And secondly, we want you to understand and use a budget that has a focus on the concept of pay yourself first. Now, if you don't already know what this means, don't worry. You're not the only one. Essentially, it's a budget where you are prioritizing investments that support early retirement, and we'll get into that really soon. Let's start with the easiest idea. First, let's start tracking your spending on a daily basis. What I have found easiest for me is to make it a habit of quickly recording each purchase that I make on my phone. There are hundreds of APS that you can get for free that really help with this. So second is getting you a budget that has the concept of pay yourself first as the focus pay yourself first is rule number one of the Five Rules of Gold. Have you ever heard of those? You might not have. So let me quickly introduce those five rules to you right now in a book named The Richest Man in Babylon by George S. Clay Seuin. This is, ah, Siris of stories that are financially related and a section in here goes over the five rules of gold. And these are, let's say, ancient rules of gold, but they still hold true today. Number one is pay yourself first, which means, ah, persons should save at least 10% of their income for the future. Number two is you should invest your money in a way that your money will simply make more money. That's the idea of compound interest. Three. On Lee. Take investment advice from those considered professionals in the field. I am not a professional, so don't take my advice. I suggest that you talk to a financial planner of financial professional when making riel money decisions, especially investments. Four. Do not invest in areas that you're not familiar with or not approved by a professional in the field. And number five never invest in something that promises incredible returns far greater than the average and never invest in something when pressure to do so by another. Those were fantastic rules that anyone should follow for Ah healthy financial future. Since our focus here is number one, the first rule of gold. Let's look a little closer at pay yourself first. This rule is fantastic, and my family and I have been using this for a while now, and I can't imagine ever not doing so. Basically, what this rule suggests is that you take a minimum of 10% of your income and immediately put it into investments before paying bills. And I know this seems maybe impossible for some people to do. But once you try it, once you commit to it, you'll see that it's easy to adjust. And even better, you'll soon start to see not only how quickly you adapt to it, but how that 10% accumulates and growth. And it will be that savings, which will grow even larger if you put it into investments like what's a index? Funds that have compound interest and let me show you Ah, really good analogy on how those types of investments work with compound interest. Let's suppose that there are two friends who just graduated high school and have entered a university. We'll call them Jake and Katie, about 19 years old, each. Although friends, they decide to take two different paths regarding finance. Katie decides she'll get a part time job and invest about $2000 every year from the age of 19 to 26 earning a compound interest rate of about 12%. Once she's 26 she stops completely and her investment continues to make. Money continues to make interest and compounds. On the other hand, we have Jake. Jake decides not to invest anything at all. Instead, he wants to enjoy his time in university. After he graduates, he gets a job. Then he decides to start investing. At the age of 27. He does. The same thing is Katy did. He invests $2000 a year and continues to do that for another 39 years. Once Jake and Katie are retirement age around 66 they reap the rewards of their investment . At this point, Jake has invested a total of $78,000 over a 39 year period, and Katie, on the other hand, invested a total of $16,000 over an eight year period. Although she did start seven years earlier, once they're 66 years old, What do you think? The differences between the gains they've made through these investments? Katie has made a walking to point to a $1,000,000 at this point. How about Jake Onley? 1.5 million? That's a stark contrast. Wouldn't you like to take advantage of the benefits of investing? How can you incorporate the pay yourself first concept into budgeting? Well, I just so happen to have a simplified budget just for you. Skill share learners, and you can download this personal budget Excel file for yourselves. It's included in this lesson and just waiting for you. If you haven't already downloaded, let's take a quick look at how to use that file. So when you open up your Excel spreadsheet, it's gonna look like this titled Pay Yourself First budget. This is your are your personal monthly budget, and any budget is broken down basically into income. That's money that comes in and expenses money that goes out. And if you want to know more about budgets, either, ah, research on your own. No google it or you can again check out the ah, the lesson I have on money management for those just getting started on my profile page. There's a little bit more information about budgeting, so we're not gonna really go into the details. But here, basically, you'll have your income. This area here budget is what you expect to make, and the actual is what you actually make. And then there the difference between those two now as you. What's different here is that this area here is your pay yourself first. Now it's up to you. I put in 10% that will automatically come out of your income. That should go into some form of savings or even better, much better investments. And then in the a darker orange. We have expenses like home expenses, transportation, health, daily living, entertainment and other savings. And then at the bottom, we have your total expenses. This six includes all your regular expenses, plus that 10% and you can change that percent to a different percent if you want, and then at the very bottom in black. This is just the difference between your total income in your total expenses, which would be down here now. He's already have a couple of numbers in here because I put in, let's say, $1000 for from job number one, which automatically takes out 10% which is $100 now. This is totally customizable for you. You can put in your different income, um, line items. You can change the percentage now. If you wanted to change the percentage in here instead of the 0.1, which is 10% you could put in zero point 15 which is 15% or 20%. It's up to you. But this is not an excel, uh, lesson. I'm sure you can figure it out. If you don't already know how to do it, it's It might look difficult for some of you, but it's pretty simple once you just start learning all of the expenses or customizable as well. So what I urge you to do is go through this change. What are your personal expenses down here, your personal forms of income up here and choose a percentage that you're going to take out . And I really suggest because this has been suggested by the experts over or at least 10% give it a try for a couple months. You can adjust, you can do it and to be so happy that you actually did it. Okay, So get started on adjusting your personal budget with a focus on pay yourself first. Great. Now you have a better understanding of how and why you should be tracking your expenses. And now you have your own personal budget that focuses on pay yourself. First, get started using it. You'll feel so much better. Want to do that? And for our next lesson in this particular course, let's take a look at how to calculate your fire number.
4. Calculate Your Fire Number : So what is a fire number, anyway? This is the number of dollars or the currency you use in your home country that you want saved in investments where you can sustain yourself for the rest of your life by taking out small amounts periodically and where that investment will typically still grow. Sounds like a dream, right? But it's reality if you plan and work for it. Unfortunately, it's not an overnight success story, so please be aware that now have you ever heard of the 4% rule? Well, maybe not. So let me explain. This is the percent that is generally believed to be the best and safest percentage that you can withdrawal from an investment without ever running out of money. Why is that? Typically, safer investments like index funds that follow the Fortune 500 U. S. Companies and the overall performance of the U. S. Stock market generate an annual rate of return of about 8 to 10%. That's an average of course, so it seems safe to only withdraw 4% toe. Live on while your investments stay safe enough and continue paying you money. What we want to know is how much money do you want in investments to use that 4% rule for your own financial freedom? Yes, that's your fire number. There are a few ways to calculate that number, but for simplicity sake, the easiest way to calculate it is to find your total expenses for an entire year and multiply times 25. Wow, that might seem like a lot, but reaching that number becomes easier when you know how to manage your money. Better to save mawr and invest intelligently. So take a close look at your budget. Once you've been tracking your expenses and calculate your own fire number and don't get discouraged if the number seems too big, it always does keep going through this course and learn more about how to put yourself in a much better financial position and on the path to financial freedom.
5. An Incremental Plan: okay, Your fire number is going to look huge at first. You need a lot of money and investments if you want to live off that 4% we mentioned earlier. But if you break this process into smaller steps than it gets easier and more achievable, and something special happens as you get further down the line with these steps, compound interest kicks in and your money starts making more significant amounts of money. Think of it like this when you earn a dollar and you put it into an investment that earns compound interest. That dollar becomes your own worker who builds more money for you. There's a reason that rich people don't keep their money in banks they invest. So let's get into the 10 steps that make up your incremental fire plan. But first you'll need to know how to estimate your net worth that simply your total assets minus your debts. So on a piece of paper, I'd like you to do this. Make a list of the things that you own and your debts. For example. The things that you own thes include retirement savings, current checking and savings account balances, any stocks or bonds that you might hold your home and your car or cars. I usually don't include any physical assets other than the value of my car, but you can do that if you wish. Then make a list of all of the debts that you have lists all of your credit card balances, personal loans, student loans, auto loans, home loans and so forth. Now the difference between these two numbers is your estimated net worth. Now that you have that number, we can go into our incremental fire plan. So to better illustrate our fire plan, let's assume that our fire number is $1 million. That's really easy number to work with, and that's about $40,000 a year to live off. So step number one is where a lot of people are right now. This is where the value of their assets, what they own is less than their debt. So there these people are in debt. They have a negative net worth. Now, if you are in a negative net worth than congratulations, so why would I say congratulations? This means that you've taken a big step here today to reverse that situation. You're on your way to step number two. If you progress through the rest of this course, Step number two is simply having a zero net worth here. Your assets equal your debts. So many people are already in step to where they're basically living paycheck to paycheck, and what comes next is a liberating. That's step number three. Step three is becoming positive. You would get your positive net worth. How much positive? Well, just $1. Now that may seem a little funny, but that $1 is ready to become your worker who will start earning more money for you. Step four is slightly further down the line here you will have accumulated a positive net worth of $10,000 and that extra money should beware in investments, right at this step, you are in a safer place. For example, if an emergency happens if unforeseen events occur, you would be able to use that money. But again, we want to keep it in investments, and even better, your confidence in reaching your fire number will be even stronger. At this point, Step five is a net worth of $50,000. This is easier than you think when applying some of the methods that will cover here soon. Basically, this amount is large enough for you to comfortably live for one year alone. But of course you shouldn't be spending it. You should be investing it. Step six is 10% of your fire number now. 10% of our example of $1 million is $100,000. At this point, you'll be able to live for a whole 2.5 years without having toe work. Imagine how much stress would disappear by reaching Step six. You feel so much more secure with your life. You wouldn't be as dependent on your job, and you could leave if you wanted to. You could find another job if you weren't happy with your current employment. Next, we have Step seven, which is 25% of your fire number. Compound interest has really kicked in by now, and you're earning a significant amount on your investments. This makes step 89 and 10 more easily. Obtainable Step eight is 50% of your fire number. Step nine is 75% and of course, Step 10 is becoming fully financially independent, where you can live the rest of your days off 4% of your investments while still watching your investments grow fantastic. So now you know the basic 10 step plan toward fire. Next, we want to cover some of the basic methods to put into your financial toolbox that will help you along the way. This is what will cover in the next few videos here.
6. Cut Expenses: great. Now it's time to take action. You have a working budget and you know the 10 steps to financial freedom. So what's the first actionable step you can take? Well, that would be cutting as many costs and expenses from your budget as you can. And I have seven categories of cost cutting ideas that you can start today. Maybe not all of these will work for you, but many certainly will. I would also encourage you to look closely at your expenses within your budget to further identify where you can trim off some of that fat as well. Our seven categories are as follows transportation, debt, energy bills, entertainment, food, insurance and anything else. So let's begin with transportation. Consider how you can save money on transportation instead of driving or paying for a taxi. Can you use public transportation like the subway? Can you bike toe work, which is not public transportation, but it's a better alternative. That may not be possible for a lot of people, though, so if you do have a car, can you use it less often? Actually, ah, lot of fire people like yourselves have decided to sell their cars and purchase much cheaper car and put the extra money to pay off debts or to invest. Consider that one seriously, since owning a car can be a significant expense next, what about some ways to save on debt? Getting out of debt is probably a priority to think about for all debts except for your own house. If you have a mortgage, lowering your debts will lower your monthly expenses. So do a little research and see if you're eligible to refinance your home at a lower rate. Do the same with your car. If you have a note and don't want to sell, you may be able to refinance your auto loan as well. Also, if you have student loans, look into if it's possible to consolidate those loans. And if you have a credit card and debts and high interest ah, high interest rate on those cards. Look into how to make a balance transfer to cards with lower interest rates. Some cards offer 0% a p r. For the 1st 18 months, and those 18 months would be a great time to really focus on paying down that amount of debt. And if you have high balances on multiple cards. Look into the option of utilizing a debt consolidation loan. Furthermore, call up your credit card company and request a rate reduction. If you've been paying on time, then they may be willing to work with you. It certainly can't hurt to ask right. It may also be a good idea to sign up for automatic debt repayment plans. Many plans, especially regarding student loans, offer rate reductions if you sign up for automatic monthly billing. So take the time to do a little bit of research on Google and contact your credit card company or companies to see what options you have. Third, find ways to cut down on your energy bills. Hot summers and cold winters can really add up those monthly electric expenses. So what can we do about it? Consider switching many of your lights to led these. They come at a bit of a higher price at first, but they're about four times more energy efficient, so they save you money over the long run. Also, unplug all electrical devices that you're not using and do you have anything plugged into a power strip like these? If those air on and a device is plugged into it and not on well, there's still an electric charge that you're paying for. Furthermore, you can lower the temperature of your hot water heater if you live in a house. Usually that temperature is hotter than necessary. Finally, try air, sealing your windows and doors. Ah, lot of heat and a lot of cold in the winter and summer escapes through poorly sealed areas of the home. So seal it and keep it in. For as for entertainment, we all love it, but a lot of us use it too much. I personally loved exercise and have a gym membership. However, I've given up that membership for exercise at the park and at home also memberships to other classes like yoga and CrossFit. Maybe something to consider dropping for a while. You'd be surprised how fit you can get and maintain without having to go to these classes. Also, cut your cable bill. Watching too much TV is going to make you so much less productive and all focus from your fire future. If you're not willing to cut out your cable, then look for ways to find cheaper access. Also take up entertainment that costs last overall. Read more books. Read more articles online. Educate yourself Mawr on saving strategies and investments, or simply get lost in a novel and travel less. Cancel newspaper magazine subscriptions. Double check your credit cards for hidden recurring subscriptions. Identify any other recurring services that you pay for and think about canceling. Five. Most of the ways to say on food. You may already be aware of most of us. Love food. It's a strong social component of our lives, and we have to eat it every day, right? So what can we do to save more money on food related expenses? First, if you eat out, try to cut down on that. Do you grab lunch at restaurants? If so, try to bring your own lunch from home to the office. And why not start cooking at home more often, And when you do cook in bulk, make a larger portions so you can store these in your refrigerator and your freezer. And when buying ingredients, look more for the generic brands with a little work on salt, pepper and spices. The taste should be about the same six. Insurance is certainly something you don't want to go without, but we shouldn't be paying or over paying for it. It may be possible to lower your monthly health insurance premiums if you look into increasing your deductible. This is better for those who don't need to regularly visit the doctor or get prescriptions filled on a regular basis. And when it comes to homeowners and auto insurance, try shopping around for better deals and try to bundle them together. It may save you a lot of money by switching to another provider and finally seven here. A few others seemingly random suggestions that may let you keep a little bit money in your pocket and, even better into investments. A lower your phone bill. Find ways to downgrade to cheaper Plan three. Cut back on Children's organized activities. Are you spending a large amount on soccer, baseball, basketball and other activities? If so, would your child prefer to cut something out and maybe focus on something that they do like more than the others? See, cut out paid household services Get the family involved together in keeping a tidy home D cut back on clothing spending e cut back on smoking and alcohol, or at least the expensive ones. Half finally, consider moving to a less expensive area or into a more reasonably priced home. These are just a few money saving ideas to get you started taking action on your financially independent future. But don't stop here. Do your own research and see where it leads you.
7. Possible Side Hustle: While saving is a great action to take, you will get closer to your fire number a lot quicker if you find new in additional ways to make more money at the same time, there are hundreds of ways you can figure out how to add a little more cash into your pockets and into your investments. All it takes is a little time and creativity to up your cash game search online and look into ways to make more money on the side. But today I want to share with you a few quick ideas to get you started. Here are six simple ways to make more cash on the side Number one. Inventory your home and find anything that you would like to get rid of and sell. You may be surprised about how much stuff is laying around in hidden places that you no longer really care for but would be of value to someone else. You can sell it online or have your own neighborhood garage sale number two. Consider being an uber driver if you have a car. This is either a full time or a part time profession that has put a lot of extra money into people's pockets. Of course, this will not be the best idea if your area is still socially distancing themselves because of the Corona virus or if your city is in some level of lock down. But life eventually returns to normal, and being an uber driver may really help. Three. Everyone has some sort of skill that they can teach. Others consider tutoring online. There are dozens and dozens of places on the Internet where you could be a tutor. You may only need Internet access and a computer with a webcam in a microphone. And if you don't phone tutoring is possible. Consider phone English. See what exists out there Online Number four People always need food, and delivery is becoming a more convenient solution for those who don't want to cook or leave the home again. If you have a car considered delivering in your area, you may not only get a paycheck, you may also get tips in the form of cash, and everyone appreciates cash. Five. Put your handmade crafts on Etsy dot com. This site was originally designed for people to sell online the things that they personally made, but there are more options than that. You can also create your own store on etc. And start advertising your products today and finally six once travel and personal movement is back to normal. If you have a home with an extra room or an extra bed, consider renting that space out to Airbnb. Perhaps you have already heard of this company through their website. You can list your space available for people to use once or regularly as a visit your city or while on vacation business or just passing through. The idea of Airbnb seems strange to the world at first, but it's really caught on to the point of making Airbnb in multi $1,000,000,000 company. So these air just six auctions for you to consider in order to make a bit more extra cash on the side. If one of these sounds good, didn't give it a try. If not, that's OK. Do a little research on the Internet and find something that fits you better. And once you start making money trying to put as much as possible toward your fire number
8. Financial Literacy: becoming financially literate is a topic that we could expand into several full length lessons. But that's not the idea today. What I want to do is introduce you to the concept of financial literacy so that I can put you in the right direction to become were financially literate than you are at this particular moment. But first, what is financial literacy? Basically, it's having the right skills to make the right financial decisions. It means you have the right understanding of such things is budgeting, saving money, debt management and investing to name a few. If you're curious about your own level of financial literacy than ask yourself these questions, number one. Do you know how to use a monthly budget? And are you doing so now, too? Are you currently debt free, or do you have an actual plan to pay off debt? Three. Do you know how much money you regularly spend on average for? Let's say, a three month period. Four. Do you have an emergency fund? Do you even know what that means? Five. Do you understand the difference between simple versus compound interest? Six. Are you aware of the types of insurance needed to protect your finances and your investments. And seven, Do you understand the general types of investments available and how they compare with each other to be financially literate? You don't need to be an expert in money, but you do need a solid understanding of what was just mentioned, and you do need to be taking action and making intelligent decisions. Some great first steps would be to build an emergency fund, get out of debt, invest a percent of your regular income and pay off your mortgage early. Now, if you haven't already done all of these, then make a plan for each one of these today or this week. What I want to do now, however, is give you a few ideas on how to increase your overall knowledge of personal finance and, in turn, build your confidence in finance. But please remember that this is a process that builds upon itself over time. Having said that, here are four actions you can start today that will increase your knowledge base in finance number one. Read books on the subject of finance. You don't need to read anything too technical, and you don't need to read. Ah 100 books. Just pick one or two for now, and you'll be off to a great start. Earlier, I mentioned the book The richest man in Babylon. Go out and get it ordered online. It's a great book to start with, and there several books out there that are fantastic. You may enjoy the book titled Unshakable by Tony Robbins. Yes, that Tony Robbins you've heard of You know, the man, the life coach with a big teeth. But this book, unshakeable, is based on the advice of 50 of the world's greatest financial minds. Look it up and see what the reviews are. Whatever your choices, be certain to read more to listen to a few podcasts on money and personal finances. Yes, reading is fantastic, but listening to experts have conversations is great as well. One of the most popular podcasts on this subject is The Dave Ramsey show. His character is a bit rough, but his advice seems really sound. You can quickly improve your financial literacy after only a few episodes. Give it a try. Three Use technology to help you with money management. If you aren't already tracking your spending than download a free application and start tracking. Today there are so many acts there are available on IOS and Android. One of the most popular pieces of software out there is called mint. Check it out and finally take more courses on finance. Here on skill share, you already have a skill share account, so take advantage of this valuable resource. Involve yourself and several of the other courses out there on finance. Have you searched for any other classes here on skill share on the topic of finance, That should be the very next thing you do after finishing this class on fire. One of one becoming financially literate is a journey that you want to always be on and you don't need to rush it either. If you build your knowledge a little by little, then you may find that you actually enjoy learning about money. Then your confidence will build and there may be snowball effect, pushing you further down the path toward financial dependence. And once you learn a few interesting and valuable lessons and personal finance, share that knowledge with others by teaching others, you gain a greater depth of understanding as well, and everybody wins. In that scenario,
9. Investing: there is a reason that the rich do not keep their money in banks they invested, and investing is essential to reaching your fire number. If you recall our earlier lesson where I introduced you to the Five Rules or the Five laws of Gold, the second law makes the point that a person should invest their savings where any dollar invested can work as your laborer, your employees, your worker to generate more money. This is what compound interest is all about, and we'll talk more about that soon. So our focus here in this lesson is about making sure you put your money to work, make your money, make more money. Essentially, however, the third Law of Gold states that you should only take investing advice from a professional in the field. And that's not me. I am not a money manager or financial expert. However, I am consolidating what the experts have said on the subject and delivering those concepts to you now when it comes to what exactly? To invest in Well, that's something that you'll have to decide alone, or preferably with the consultation of a financial planner or some other expert. As you become a little more financially literate. The answer to where you should invest your money will become much clear much more quickly. What I want to do today is show you why investing is so critical to your wealth and what some of your more general options. Maybe before we go further with investing, I have a question for you. It's referred to as of the magic Penny. Let's say you have a choice. Two choices. Actually, Choice number one is just take $2 million. Imagine right now you could take $2 million do with it as you choose or take the Magic Penny and this Manja Penny does something special. What it does is it doubles its value every day for 30 days. Well, of course there's got to be a catch, right. Why would we call it the Magic Penny? Well, if we took that penny and double that every day for 30 days, the value would come out to be over $10.7 million. Definitely better than $2 million right? This example is an illustration of something called compound interest. Wikipedia defines compound interest as the addition of interest to the principle sum of a loan or deposit or, in other words, interest on interest. Which means if you invest money into something, you expect a rate of return. Let's say 5% as time goes by and you make interest on your investment. You also start to make interest on that interest, and it just gets bigger and bigger as time goes by. Well, Warren Buffet, with an estimated net worth of over $76 billion someone who is unquestionably one of the most successful investors in history said that his wealth comes from a combination of three things living in America, some lucky jeans and compound interest. Sure, America's great because it's considered the land of opportunity. And, yeah, DNA has something to say. His personality is very investment driven, but number three what? I want you to focus on his compound interest. It's compound interest that made his money make money, and Albert Einstein had something to say about compound interest to, he said. It's the eighth wonder of the world and more specifically, and take note, quote. He who understands it earns it. He who doesn't pays it. If you don't take advantage of investment opportunities, you may end up paying interest instead of earning it. And in order to understand a little bit more about compound interest, you want to understand the two types of interest. There is simple and compound, and both are available in investments. Simple interest is a fixed rate. Let's say you have $100 and 8% interest no matter what. Over time, you're going to make $8 on that investment every year. However, with compound interest, you'll make $8 the first year, and then you'll make another 8% on the $108 you had the second year, and it continues to grow. So that's a no brainer, right? You want to go with compound interest to make it a little clear. Let's look at a few examples between simple interest and compound interest, and here we're going to invest $10,000 in simple interests and $10,000 in compound interest . Both of these, at the same rate of 8% here in year one from $10,000 we get $800 return with $10,800 at the end of year one. We have the same thing over here in the first year with compound interest. But beginning in year, two things start to change. The difference is, although in simple interest, we still get the same rate of return 808 108 100 every year. What changes is we're making interest on our interest with compound interest notice. The first year's return is $800 the 2nd 864 the 933 1008 and it just continues. Imagine doing that over 20 or 30 years. Imagine continually re investing money. So where should you invest the bank? The stock market Well, the two most common places to put your money that have compound interest our banks and the stock market. Which one do you think is considered the best option in the bank? You have other options, such as checking accounts, savings account money, market account and certificates of deposit, respectively. Usually, a checking account will be 0.5% as well. A savings account money market is twice that at 1% and a certificate of deposit is a full 1%. Not bad, right? Well, let's look at the stock market on average, in America, at least, the stock market returns 8 to 10% per year. However, banks do guarantee these interest rates, so if you really want to play it safe, put your money in the bank. However, the stock market may have an average 8 to 10% per year return, but it's not guaranteed. It really depends on the economy and how things were going. However, over the long term, the chances are you'll get that 8 to 10% return. So bank or stock market well tell you what. The rich don't keep their money in the bank. There's a calculation. Or let's say there's a financial trick called the Rule of 72 this helps you understand the difference between 3% 4%. 5% return because there's just sort of numbers, right? Well, the rule helps you understand how long it's going to take for your money to double with compound interest, and it's a simple equation. Simply divide 72 by the interest rate. For example, if the interest rate is eight, it's 72 divided by eight. So where to invest? Banker stock market? Well, let's take another look at the chuck ings, savings, money market and certificates of deposit. How long will it take for you to double your money checking and savings account? 1440 years? That's kind of a long time. Take care of yourself. Money market account. 720 years. Still huge amount of time. Certificate of deposit. 72 years. You might make it long enough to see your money double. But what about the stock market? Let's take the 8% divides 72 by eight. And how many years will it take on Lee? Nine years to double your money again. What would you choose? So I have the same question for you as earlier. When should you start investing? Yes, you guessed it right now. Take your money. Put it into something that you trust that you've done your homework and that earns compound interest. Now, I'm not here to give you advice on exactly where to put your money. So I suggest do a little research. You confined indexes, mutual funds. Other investments that earn compound interest in are considered relatively safe. So the next time you have some free time Google investments that earn compound interest and go from there
10. Positive People: the final component of reaching your fire number and becoming financially independent is something you might not have expected or you might not fully understand, at least not yet. The final component in our course is to surround yourself with right types of people, positive people, people who will consciously and subconsciously helped push you in the right direction as opposed to hold you back. I would like you to think of the top five people you spend time with. Think of their names right now. Think of their characteristics for person number one. What are their qualities that you feel her positive? What other qualities that you think are negative. If you really want to get the most out of this lesson, pause the video and write down all of this on a piece of paper before we continue. Okay. Are you going to push bars? Don't worry, I'm not going anywhere. Okay, now that you've identified the five people you spend the most time with and they're positive and negative characteristics, I want you to keep this next statement in mind. Did you know that you are the average of the top five people you spend time with? well, consider that carefully. Starting today and for the rest of your life. You may already know this, but research shows that the people you spend the most time with have a significant impact on your thoughts and behaviors. This is true to the point that if your close friend gains weight, you're more likely to do the same. It's really up to you, of course you spend your time with. But if you're looking for a little advice on the types of people who would be a catalyst and creating happiness and success in your life, I'd like to share with you three tips about who to spend more time with number one. Spend time with people who are smarter than you. This is the best way to grow because you're not going toe. Learn much from the people who have similar backgrounds in a list of experiences. As you dio, real growth comes from new experiences and new knowledge that comes from those who know more than you. Number two Get to know people who have already accomplished the things that you want to accomplish. This is true. Four. Financial independence and really any other goal you might have. That's why I suggested earlier on going online and finding other fire related groups who are already pursuing financial independence. Learn from them and number three. Identify those who are negative and tell you that your goals are unrealistic or unobtainable. Those people will hold you back in more ways than one. It's these people who may be more interested in you not growing or finding greater success , because perhaps they're jealous or don't believe in you. Those people are not really friends. The great Les Brown once said. You should always practice O Q. P that stands for Onley quality people. So practice surrounding yourself on Lee with quality people, and you will soon see how your life will continue down a positive path.
11. Class Summary: Theo. Congratulations. You made it to the end of this course on Fire 101 The basic steps. Put yourself on the road to financial freedom. Please remember that each of these nine steps, although not necessary to follow in order they are necessary to implement If you want to obtain financial freedom earlier in your fifties forties or even your thirties, those steps are create a positive mindset. Use a pay yourself first budget. Understand how to calculate your fire number, your incremental fire plan. Cut your expenses, Make more money. Become financially literate. Certainly invest in Surround yourself with positive people. The earlier you start, the greater your chances of success. So start today. If you haven't started already and please click follow so you could be notified. When I publish additional videos on the subject of fire and financial success, I'll be adding mawr for suit is just like you. Soon. I truly hope you found these videos to be a value, and I hope you find yourself in a better financial position soon. Thank you and take care
Cal Hyslop MBA, University Instructor, Be Free to Do the Work You Want
