Just about everyone on earth wants to have more money not because money in and
of itself is that great but for the things that money can buy some of these
things cost very little but life's most precious material items tend to cost a
lot not to mention money solves a lot of problems both immediate and long term
and getting it is what keeps most of us driven each and every day it is the
reason we work save and invest however there is more to money than what meets
the eye some facts about money are common knowledge while others will
utterly shock you and in this video i will share with you five brutal truths
about money you need to know and if you're new to the channel then hit the
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truth number one saving won't make you rich saving money is great but if you're
looking for true financial freedom saving money in the bank shouldn't be
your only strategy if you want to buy a car in the next few months or you want
to go on a holiday or maybe you just need to have a stack of cash put away
for unforeseen expenditures in the future then saving money is an effective
tactic however if you are looking to multiply wealth and have your money work
for you then saving can only take you so far i'm sure you know a good number of
billionaires and i'm talking about people like bill gates jeff bezos jack
ma warren buffett and oprah winfrey have you ever asked yourself did these people
become rich by saving money or did they become rich by letting their money work
for them if you don't have an answer to that then i'll tell you they put their
money to good use and allowed it to work for them money is just a tool and a tool
should be put to work not left to pile up in a toolbox so how could my money
work for me you may ask the answer is simple you invest it you can't eat or
drink cash it's only a means of exchange therefore the best use for it that is if
you're looking to become rich is to invest it real wealth is having lots of
assets and not necessarily lots of cash this is because assets keep raking in
money while still remaining yours while money stashed in a savings account
generates little to no profits once again saving money is great but it
should be used to acquire assets that will increase your inflow of cash just
so you're clear an asset is something that generates income for you a
liability is the exact opposite as it keeps taking money from you the car you
saved up to buy won't earn you money neither will a holiday in the bahamas
but a commercial property in manhattan will saving today doesn't guarantee your
survival tomorrow there is a little thing called inflation and it hurts your
spending power significantly the bottom line is this if you're saving then save
to invest don't save simply as a means to an end
truth number two putting money in the bank isn't risk-free growing up we were
made to believe that the safest place you can put your money is in a bank it
seems logical as you can save large amounts in an account without fear
however putting money in the bank similar to almost everything else in the
world comes with its own risks how risky could stashing my money in a bank b well
i'll point them out to you in a bit if your reason for opening a savings
account is to make some money via interest then you will end up
disappointed in case you don't know a savings account is not designed to
multiply your money to any significant level this is because they offer very
low interest rates so you're pretty much left with what you put in another risk
here is inflation your returns can be so low that inflation can eat away at the
value of your deposit for the sake of making returns on your reserves the
better option would be to invest in stocks or bonds they offer much more
potential in terms of generating returns this is not to say stocks are safer
because they are not but they offer a lot more rewards than a savings account
weigh the risks first there is also the issue of bank charges a lot of banks
will charge annual fees for running a savings account with them in most cases
the annual charges on your savings account are actually higher than the
interest you will make on the same account and that's just terrible
there is also hidden fees that may be charged due to certain activities on
your savings account for instance if you go below your bank's required minimum
balance you may have to pay some penalties for this reason it would be
wise of you to be sure of all the fees associated with your account before you
open it other than that you will have several charges stacked up against you
which you never bargained for additionally operating a savings account
comes with certain limitations besides needing a minimum balance in your
account at all times there is also a limit to the number of transactions you
can make in a day lastly there are instances where banks fail and this
could happen for different reasons if your bank takes a nosedive then your
money will be at risk you can protect yourself firstly by understanding all
the terms regarding your account opening and secondly by ensuring your
hard-earned cash is insured by the fdic or federal deposit insurance corporation
by doing this you can have some confidence that your money will be safe
failure to do this unfortunately will give you sleepless nights when your bank
starts showing signs of going under truth number three a higher income
doesn't mean a larger net worth contrary to popular belief earning a large income
doesn't mean you'll have a large net worth you may wonder how this is
possible since earning more usually means having more right
wrong let's be practical jeremy is an accountant who makes 90 dollars a year
with a net worth of ten thousand dollars whereas luke is a fitness instructor who
makes thirty five thousand dollars a year and has a net worth of hundred and
eighty thousand dollars so who would you say has more wealth jeremy or luke your
answer is as good as mine it's luke and this is because he has a higher net
worth even though he earns less than jeremy so how did luke do it simple as
far as building wealth is concerned the size of your income doesn't guarantee
you'll have more in the future saving and investing were his habits he used to
grow his net worth unlike jeremy who saved a little and never invested when
they both retire who do you think will live a more comfortable life luke again
this is because even though he earned less he invested more in his future and
that is the key to having a higher net worth it's true that earning a high
salary can help you save more and invest larger amounts so if you're a high
earner and have the intention of saving and investing your money then good for
you but if your huge income only leads to extravagant spending and unnecessary
show-offs then it'll be a waste at the end for definitions sake let's be clear
on exactly what income is according to the irs income is all taxable earnings
or wages an individual receives from working you can earn income in two ways
by working for a person or organization or by creating your own means of
earnings as a self-employed person as for the definition of net worth well
it's as simple as what you own minus what you owe assets minus liabilities
equal your net worth but as i just said earlier high income doesn't guarantee
wealth if you earn five thousand dollars a month and you spend seven thousand
dollars a month then it means you are in debt but if you earn three thousand
dollars a month save 300 invest 500 spend the rest on your personal upkeep
then you can become a millionaire after all the initial investment on facebook
was just a thousand dollars truth number four you can only do so
much with your own two hands some entrepreneurs start and run their
businesses alone there are so many ventures you can go into all by yourself
but it doesn't mean you have to run it solo many entrepreneurs fail to realize
that the more capable hands you have the higher your productivity and the more
money your business can make let's be practical once more for example a baker
starts his business and he bakes five cakes per day it costs him fifty dollars
to bake a cake and he sells each one for a hundred dollars this means he's making
a profit of fifty dollars on each cake or two hundred and fifty dollars a day
he is only one human and there's only so much work he can do alone especially
when the business starts growing and more orders keep coming in if he were to
continue baking on his own he would never go beyond his five cakes per day
maximum meaning he wouldn't be able to make more than 250 dollars per day from
that particular business if you were to smarten up and employ an extra set of
hands to help him bake he would be able to double his production and start
producing 10 cakes per day thereby increasing his earnings to 500 as
opposed to 250 dollars it's true that he would have to pay the
new guy for his services but that would just be a fraction of his profits
meaning he would still be earning more than he was when he was baking alone
being an entrepreneur doesn't mean you have to burn yourself out with work you
should share tasks to increase productivity and also invest in passive
income streams so you can make money when you sleep truth number five working
hard isn't as good as working smart we've been told from the days of our
youth to always work hard if you want to achieve anything good in life while that
seems like good advice it may not be the best advice as working smart beats
working hard any day so what's the difference between working
hard and working smart working hard means dedicating a lot of
time and effort to doing a particular task or working smart means spending a
lesser amount of time and effort but executing the exact same task or even
more tasks working hard involves a lot of physical effort to get jobs done
while working smart requires less physical effort and is dependent more on
tactics and ideas remember the baker i previously mentioned at the beginning
stages when he was making the cakes alone he was working hard and making 250
dollars in profit per day he started working smart by employing an extra set
of hands which helped him double his profits imagine all the work you would
have to do if you were to bake 10 cakes per day alone smart work will save you
time keep you better organized and keep you less fatigued also those who work
smarter make more money than those who work harder gone are the days of brute
strength hard work will wear you down and won't give you the time to engage in
other profitable activities as far as building wealth is concerned be advised
to work smart and not hard know what your potential customers want and find
the fastest most cost-effective means to reach them and cater to their needs 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