If you're still currently struggling with your financial situation, here's why: your
skills.
To be precise, your money skills.
Because your money skills determine whether you're currently in a good financial position
or at least on your way there, and that's exactly why I'm showing you the basic 5 money
skills you should definitely master before it's too late!
Your financial situation can't be changed overnight, so it's even more important to
start learning the necessary skills now and work on your finances bit by bit before you
retire and can't change anything or even worse: you can't actually retire at all because you
don't have enough money for it.
In the end, we'll show you the one skill that was the absolute game changer for us and took
us from "absolutely no plan and no direction" to "clarity and certainty" with regards to
our finances!
But before we dive deeper, hello and welcome back to our channel!
We are the finance nerds and we help hardworking people like you to achieve your financial
goals with the income you have by sharing our knowledge in personal finance such as
saving money, budgeting and investing, and show you how to make it work for yourself.
And with that being said, let’s start!
Albert Einstein once said "The definition of insanity is doing the same thing over and
over again and expecting different results."
And so it is with your money skills and habits.
How can you expect your situation to change if you do the same thing day in and day out
from month to month and year to year?
You can't expect to get a six pack if you're pounding hundreds of grams of sugar every
day and it's the same with your finances!
Bad money skills and habits = bad financial situation.
We hope we have made it clear with this example how important it is to work on your skills
and habits if you want to change something.
And since you are here right now to change your financial situation, here is money skill
number 1: Create a frugal and conscious lifestyle
Everyone knows it currently, everyone talked about "Live Frugal", "Frugal Living Tips To
Save Money" and yes we can not necessarily take ourselves out of it, even we preach it
again and again, but for good reason!
Do you know the book "The Millionaire Next Door"?
If not, a clear reading recommendation, but that's not what today is about!
It's about the fact that while writing this book, a survey was made with 1000 millionaires,
with the aim of finding out how they got their wealth.
And many may now think that millionaires are wasteful with their money and spend a lot
of money on all sorts of things.
To put it in a nutshell: Exactly the opposite is the case.
Even though it is always portrayed differently on television or on social media, the survey
revealed the following....
Of the 1000 millionaires, 50% never spent more than $140 on shoes, 90% never paid more
than $27 for a bottle of wine and 50% never paid more than $29,000 for a car.
The best thing you can do is create a frugal and most importantly conscious lifestyle in
regards to your money, because the millionaires surveyed, built their wealth precisely because
of it.
But more importantly....
They also kept it because of it!
So how do you create a frugal and conscious lifestyle?
The first basic rule is to live below your means.
This means that your expenses should not exceed your income so that there is money left over
each month.
The 2nd basic rule: Create a budget where you track your income, expenses and also your
net worth and keep track of it, and the 3rd important basic rule: Always pay yourself
first.
When your salary comes into your account at the beginning or end of the month, plan a
fixed percentage amount to be transferred directly to another account.
To make all these basic rules much easier to follow and automated, be sure to watch
the video at the end, because there we will show you how we could completely automate
this process.
Control your spending As just touched on, one of the best skills
you can acquire is controlling your finances, and your finances in particular.
Because for most, spending too much is what prevents them from living below their means.
This has many reasons from social pressure to please others to simply not being aware
of what they are spending on and especially how much money they are spending.
So how can you make this work for you?
First of all, you should make a list of all your expenses so that you are aware of what
you are spending money on and how much.
Do this not just for a week, but for 1-2 months and make sure that you track all your expenses,
including the coffee to go on the way to work.
After you've done this for 1-2 months, you'll have a nice list where you can see exactly
what and how much money you're spending and can work on either finding alternatives that
are cheaper or eliminating those expenses completely.
If you like you can also use our All In One Personal Finance Tracking Sheet to track your
spending.
You can find the download link below in the video description!
Automate Your Income Warren Buffett once said "Make money while
you sleep or work until you die".
You're probably thinking to yourself that it's easier said than done, right?
Well, to be honest most people fail because they think they need to make $3000-5000 a
month while sleeping to make it worthwhile.
And of course it would be nice, but let's take a cue from Warren Buffett, because it's
not about earning a lot of money passively from one day to the next, but building it
up steadily and in small steps.
It doesn't matter how small the steps are, it's about starting and taking the first steps.
So what is the easiest way to earn money as an employee or self-employed in your sleep
without investing a lot of time?
Sounds like a dream, doesn't it?
In our eyes the easiest way is to invest in dividend stocks or even easier in ETF's that
hold dividend stocks and actually pay them out.
You have to pay attention to that when you buy ETF's if they are "distributing" or "accumulating".
If you want to generate income you have to choose "distributing" and if you want to save
over a long period of time and reinvest the income automatically you should choose an
ETF that is "accumulating".
Of course, to achieve an automatic income we choose ETF's that are "distributing".
Observe your buying behavior Do you remember?
"Conscious Living.
That's what this is all about, becoming more aware of how you spend your money and observing,
reflecting and adjusting your buying behavior accordingly.
The cycle for change or to achieve a goal is always the following: Goal -> Plan -> Execute
-> Reflect -> Optimize until the desired state is reached.
For example, you want to save $1000 per year, that is your goal.
How do you achieve it?
By reducing your expenses, for example when shopping.
Now you go shopping again and again and observe that you still spend more money than you had
planned.
Now you have to reflect on what the reason is... is it because you are prone to impulse
buying or is it because you don't look at the offers before you go shopping?
Look at possible reasons and then look for solutions.
Keep going through this cycle until you reach your goal or desired state.
Now we have come to the ability that allowed us to completely change our financial situation
and completely automate 90% of the processes....
Build your own account system So that you only have to make most decisions
and processes once.
And also only have to think once about what you need or want to spend much money on and
then automate the whole thing without having to worry about it, the number one skill is
to build out your own account system.
Since it is of course very individual and everyone has different needs, the perfect
account system looks different for everyone.
You have all the freedom here and the goal is to find the right one for you.
You're probably thinking "Oh my God this is a lot of work", but thanks to the internet
and online banking this shouldn't be a problem.
But to give you an idea of how this can look like, we will now show you a slimmed down
version of our account model.
If you want to have a detailed video about our account model, write "account model" in
the comments and we will create a separate video.
It all starts with your "Salary", this will be posted to your "Salary Account" or "Livelihood
Account".
Now 50% goes for your living expenses like rent, food, mobility and free time and the
other 50% is split to other accounts.
We have 4 other sub-accounts for this: Once the fun account, then two reserve accounts
with different purposes, and an account for investments.
20% of the 50% goes to your fun account, this is for all activities like going to restaurants
or movies.
Another 20% goes to the reserve account, this is your account where you save e.g. for vacations
or also repairs.
10% goes to your other reserve account that is for tax payments or also insurance payments,
which are not debited monthly but e.g. annually.
The last 50% goes to your investment account, which is for investments in stocks, ETF's
or real estate.
It is important that all these bookings happen automatically in the form of a standing order.
And now that you know what money skills are good for your financial situation, it's just
as important to know the habits that are bad for you.
For That: Watch the video in the middle now!
If you enjoyed the video hit the like button and if you haven't already, subscribe to our
channel so you don't miss out!
We hope to see you in the next video.