Whether we want to admit it or not we all make mistakes from dating that girl
our parents told us not to to eating one too many rounds of food at the buffet
mistakes are simply a part of being human now while you can't magically
erase the mistakes you've made in the past i can help you dodge some costly
ones in the future and as such i want to share with you five personal finance
mistakes that will make you broke and if you're new to the channel then hit the
subscribe button below for more life-changing content mistake number one
paying off your mortgage before investing sometimes in life it's not
what you do but the order you do them in we learned this lesson pretty quick in
life when we came to realize that your pants need to go on before your shoes
then we were reminded of it when we added and said it multiplied and failed
our middle school math test i'm sure there are a million other examples but
the point is is that it's great to do the right things in life but the
sequence that said things take place is of the utmost importance one person
example of this relates to your mortgage and investing now i know for some people
the question of whether you should invest your money or pay off your
mortgage first isn't even up for discussion not that you've already
determined what is the best approach for you but because you are miles away from
being able to afford a house of your own that's fair home prices have been
breaking orbit faster than elon musk's rockets making the home buying process
even more challenging than it already was but i know at one point or another
you'll be making a leap into home ownership so as such you need to know in
what order you should prioritize paying down your mortgage versus investing to
put it bluntly it seldom makes sense to wait until you've paid off your mortgage
to start investing and this is primarily due to how compound interest most
people's main wealth generator works you see compound interest relies on two key
factors time and capital time is incredibly important when trying to
invest your way to wealth and the more time you can let it work for you the
better however if you put off investing to pay down your mortgage a liability
that typically comes with somewhat low interest rates then you were literally
missing out on thousands of future dollars let me share with you just how
costly putting off investing can be if you start investing 300 a month from
ages 18 to 27 and receive a 10 return a year you can stop investing at 27 and
have almost 2 million dollars when you retire at 65 which is eight thousand
eight hundred dollars of your own money invested however if you only started
investing at twenty eight you'd have to invest four hundred dollars a month
until you're 65 or 175 thousand dollars of your own money to get the same
results as someone who started investing earlier in short when it comes to
investing the sooner you start the more money you accumulate all other things
being equal now the reality is that if you have a mortgage you simply can't
neglect to make its payments and focus every penny you have on investing as
such if you ask me the best way to balance your mortgage and investing is
the following every month ensure you cover your mortgage payments failing to
do so will have you out on the street and we definitely don't want that then
with the other disposable income you have use it for investing do this up
until the point where your investing returns exceed your mortgage interest
rate if or when it's too invert then and only then should you start to consider
focusing more on paying down your debt otherwise prioritize your investments
and i promise you'll be further ahead financially mistake number two assuming
what worked for your parents will work for you while your parents can act as a
valuable source of information in many areas of your life the reality is that
they like you only know so much because of this they will only be equipped to
offer you advice in certain situations but should not be relied upon in others
need a few examples sure i've got you covered one great example is modern day
dating chances are your parents aren't even aware the names of today's most
popular dating apps let alone how you can optimize your approach to get more
dates as such they really can't be any help in getting more people to swipe
right on your profile another example comes in the context of your career most
people grow up with their parents preaching to them the importance of
studying hard and getting a good job out of college while they don't have
anything against formal education the fruits it yields simply aren't as great
as they once used to be when our parents graduated entry level salaries were
probably not far off what they are today yet you could buy a new car for ten
thousand dollars and a house for a hundred thousand dollars today the
average new car cost is just over forty thousand dollars in homes in major
cities can easily start a 500 000 or more therefore when you could buy a car
for only a fraction of your annual salary or home on two years income and
collect meaningful raises at work then of course this route made sense
unfortunately with the rising cost of well everything the same income
escalation approach isn't gonna cut it you're gonna be sliding backwards
financially if you continue to collect three percent raises when home prices
are rising at ten to twenty percent a year in fact if right now you think
prices are getting a little bit out of hand then make sure that you smash the
like button below the role of the story is that to tackle modern day problems
you need to employ modern day solutions in the context of modern financial
management most cases it's not enough to simply rely upon your salary to keep you
financially afloat chances are you're gonna need a side hustle or side
business to keep you making financial strides forward while this will mean
less time to sit back and enjoy life it's better to be prepared when those
financial challenges come than to be surprised and struggling when they do
therefore while your parents are still to be a valuable ally to have in your
corner think through what advice or help you rely upon from them as for what
worked for them may not necessarily work for you mistake number three not having
any financial goals ask just about anyone around you and they will tell you
that they would love to see their financial situation improve maybe this
comes in the form of lowering their credit card debt paying off their
mortgage or simply making more money for every hour they work the crazy part is
that we all want to see more financial prosperity than we already are achieving
yet most people can't connect the dots between where they are now and where
they want to be why is that because they have no financial goals when it comes to
financial goals there are three types of people the first are those without any
financial goals these are people that just go with the flow and let life
determine where they will end up financially while this seems like the
most whimsical and laid-back approach which it is it's the most inadvisable
one next they're the loose planners these are people who will share their
financial goals of being rich or starting their own business but have no
idea how they will meet these poorly crafted objectives again don't be this
person finally there are those who have a clear financial goals and all the
tasks must complete to achieve them it doesn't take a rocket scientist to
realize that this is a group of individuals you want to be a part of and
for good reason unless you win the lottery or are born into wealth your own
financial prosperity will not be due to luck but hard work and planning instead
for instance if you know you want to retire at 55 and right now you're 20 you
have two choices you can continue to tell people you want to retire early and
hope it happens or you can calculate how much money you need to have to retire in
your 50s calculate your monthly investment to meet this mark and then
execute month after month which of these two people do you think will have the
better chances retiring early if you guessed the second person then give
yourself a gold star because you're right the reality is that becoming rich
is simple create detailed goals and tasks you must complete to get there
will be easy no will you face roblox along the way absolutely but at least
with a plan you can ensure you're moving in the right direction instead of
wandering aimlessly which is the case when you leave your financial
aspirations up to luck and not proper planning mistake number four thinking
you must buy and not rent a home have your parents ever asked you well if
jimmy jumped off a bridge would you jump too at the root of this question is our
need to fit in and one way that most of us try and fit into social models is to
progress through the typical life path of going to college getting a job buying
a house getting married and finally starting a family the reality is that
none of these common life events are required however society has made us
feel like we must check off all these items on our becoming an adult list
while i'm not here to tell you who you should date or which college to go to i
do think it's wise to discuss the realities of homeownership in today's
financial climate if you're anything like me then you are sold to dream of
one day owning your own home now as a homeowner myself i can tell you that
there is a sense of pride that comes with owning your own place however that
sentiment is costing more and more by the day as such we are slowly seeing the
number of people renting climb and if you ask me this is perfectly okay now is
it okay that people who want to own a home can't because of how outrageous
prices have become of course not however i think it's great that with more people
renting hopefully we'll start to see a shift in how society looks at renting as
a means of long-term accommodations now for those who are raised to see
homeownership as the only long-term housing arrangement to entertain then
you probably see renting is throwing away money and this is a common
misconception many people hold the truth is that while you may not be building up
equity when renting you will realize a ton of benefits by doing so for instance
you don't have to spend years saving for a down payment and can invest those tens
of thousands of dollars instead moreover you can sidestep property taxes selling
costs and move basically at will when rented finally if something breaks you
can sit back and relax as your landlord bears the brunt of your misfortune
therefore while buying a home makes sense for many people renting does as
well mistake number five ignoring your invest in costs if right now you're
regularly investing then give yourself a pat on the back because you're doing
something great for your financial future long-term investing is one of the
most reliable pass to future wealth but there is one aspect that you must be
aware of to ensure your money grows to its full potential what is that one
aspect you're investing costs a 2021 poll found that roughly 30 percent of
americans use paid financial advisors to manage their money and while it's great
to have someone helping you through your investing journey you need to know the
costs that come with gaining this advice the average advisor fee in the us is
roughly one percent seems inconsequential right well it isn't if
you invest a thousand dollars a month for the next 40 years with your
financial advisor you would be handing over almost 600 000 in advisor fees do
you have 600 000 to give away because if you do i'm willing to take it off your
hands fortunately there are more cost effective ways to invest these days you
can invest in what will cost index funds that will have you paying just a
fraction of those pesky costs receiving as good or even better investing returns
i just want to share a quick reminder that right now you can get up to 10 free
stocks worth up to 2 000 each by signing up for moomoo using the link i've left
down below in this video's description it's basically free money so sign up
while you can boss hey it looks like youtube thinks this next video is the
one that will change your financial life forever give it a watch and let's see if
they're right