5 Common Millenial Money Mistakes Explained SugarMamma.TV
Hi everyone, so recently there was a really interesting survey conducted and they wanted to work out amongst the general public what was the level of financial knowledge and understanding around people in the way that they manage their money make financial decisions and also understand basic financial products. Now the results were really disturbing and almost like flagged a potential danger. They found out that almost 80% of people have little to or no basic understanding of simple financial concepts. They didn’t understand the difference between secured and non secured debt, they didn’t understand the difference between simple and compounding interests, really basic things.
So instead of focusing on all the doom and gloom that comes from this whole is gap in financial literacy, I want to focus on solutions, I want to empower you guys, educate you you guys so that when it comes to making decisions around the way that you choose to use money, spend money, make money and earn passive income you’re doing it from an informed, inspired and empowered place. Now if you’re a millennial you are at such an exciting stage in your life. You have got the most amazing future ahead of you filled with opportunities, adventures and excitement and I want you to get up and seize every single moment and I never want money to be a block or a challenge for you so for this video I’m sharing with you five things that you need to know and understand and actually do so that you make better decisions around the way that you attract money, save money, earn money, invest money and pay down debt because I want you to have an incredibly fulfilled life so listen up.
Alright so the first thing I want you to understand is the difference between good debt and bad debt, now bad debt I like to call toxic debt. It is when you borrow money to buy things that depreciate in value, such as credit cards where you buy clothes or even go on holidays or personal loans or car loans. These are assets that you borrow money for to buy that then go down in you and the interest on this is typically quite expensive. It actually is a massive financial handicap now this is the type of debt you want to minimize or just simply not have at all in your life it’s holding you back financially. The opposite of this type of debt is when you borrow to invest. Now this is healthy debt as long as you do it within a you know conservative range where you can always service that debt and pay it down. Now this is when you borrow money for exciting things like for example buying an investment property things that accumulate in value over the long run, pay you a passive income, such as rental income and potentially there may be some tax advantages where you can potentially claim some of the interest of your tax.
Now that is the type of debt that gets you projects you into a life of financial security when it’s managed properly. You want to minimize your personal debt, maximize your investment debt. You need to understand the difference between the two investments that will help you grow your wealth, will be a financial benefit and blessing incorporated in a wise sensible strategy. Now the second thing that I want you to understand and do is find out your credit score. Your credit score is a bit like a report card. It’s a number that tells the bank how reliable you are in borrowing money. Are you good at servicing the interest? Are you good at paying down the debt? The higher your credit score number, the more reliable you are to lend money to.
Now if you have any dreams or aspirations or goals as you know such as buying a home or buying an investment property you need to know what your credit score is and not only do you need to know it now you need to know it consistently and regularly in the future in case it varies and changes. Simple things like forgetting to pay a bill on time can really impact your credit score and be really detrimental to you in achieving your goals and dreams so find out your credit score today make sure you regularly check it and make sure you do as much as you can to keep it as high as possible. I will make sure that I do a video for you guys showing you how to recover a low credit score and what you can do to maintain credit score so make sure you subscribe if you haven’t already also I have put a special link in the description box for you where it is really quick and easy to find out your credit score and it’s also free so there is actually no excuses as to finding out your credit score right now.
The third thing that I need you to know and understand is the difference between simple and compounding interest. As I said in that study almost 80% of people didn’t understand the difference between the two and it’s kind of important because it can be the difference between you drowning in debt and rolling in money. So simple interest is very easy to understand. Say I borrow $1,000 and the interest rate is 9%. I have to pay $90 per year in interest to maintain that $1,000 loan. If I paid, that’s no problem, that loan stays at $1,000. However if I decide not to pay that $90 in interest each year the loan is going to compound which means that $90 interest gets added to the loan so one year later not only do I owe $1,000 on the loan I now I 1090 dollars and the interest of nine percent is now calculated on that loan of $109 one hundred and ninety dollars so my cost of borrowing is now dramatically increased by another nine percent if they interest being paid on interest now this is why people can so quickly get into so much credit card debt because the interest is compounding they think in their head that you know the interest is in that high on that credit card and they don’t actually make any repayments or even service the interest and that credit card debt just explodes and it snowballs and it becomes more and more overwhelming and harder to actually pay down so make sure you understand the difference between simple and compounding interest always pay the interest and ideally always pay down your debt before things that I want you to understand and do is understand the benefits of small and simple regular habits little things like putting ten percent of every dollar that you earn into a separate savings accounts for emergency or having a regular investment plan where you build up a share portfolio and start earning passive income or even putting little bit extra above what your employer puts into your superannuation or retirement plan all these little things when you especially you start them earlier in life really do add up over the long run and I’m going to link in the description box an amazing video I did that it shows you how to invest and become a millionaire realistically with no get-rich-quick schemes and also when you create these healthy habit systems in life you don’t actually have to think about doing you just do it naturally and the results become organic you see the most incredible this financial security build up around you and you feel really empowered really in control and you really start to understand the capability of what you can actually achieve and you learn how to raise your bar it’s an incredible zone to be in and if you now understand the difference between simple and compounding interest you’ll know that you can get compounding interest actually working for you and building up your own financial wealth and security and then the fifth and final and most important tip not just for Millennials and money but for everyone and that is to budget and when I say do it budget I mean to a budget right now and also check it on a regular basis doing a budget is no longer boring and dull in fact it’s empowering is exciting it means that you’re back in control and in fact it’s actually quite fun and a little bit sexy knowing that you control where your money goes that you make proactive empowering decisions with your hard-earned cash now I recommend you do a budget now and I also recommend that you check it on a regular basis when you understand and know where your money comes from and where it goes you actually get back into the driving seat you can be proactive in setting aside savings to pay for large expenses you can set aside savings and maybe even investing for some of your financial goals and you can also get excited about saving up for other personal goals such as saving up for a holiday or a new car or maybe even your first home but doing a budget and reviewing it regularly means you know exactly what you’re doing with your hard-earned money and it feels good now if you’ve never done a budget before and don’t even know where to start and feel the idea of doing a budget really overwhelming it’s okay it’s alright I have a solution for you I actually signed a budget template app for you you can download it from the Apple Store save it on your phone go through the process and it will leave give you banking instructions to help you stay on top of your bills make sure that you pay your bills on time and also you achieve your other savings and investing goals it’s really easy to use so I highly recommend it and I actually designed it for you guys as subscribers now I am really serious about squashing this gap in financial literacy I want to prove that this study is actually incorrect the people who really do know and understand basic financial concepts and make great empowering financial decisions around what they do with their hard-earned money and this is exactly the reason why I started this YouTube channel so if you want to learn more about money and how to make money how to pay down debt how to build up savings how to achieve your financial goals make sure you subscribe because I have so much more content on this channel already and I’m constantly uploading content and of course I’m always open to your feedback and your video suggestions so make sure you put in the comments box below any video ideas you would like me to make now I’d also like to take this opportunity to thank get credit score for sponsoring this video they are really serious about helping everyday Australians understand where they stand financially by letting them know what their credit score is so waste no time at all jump online it is quick easy and free so you can find out what your credit score is and let me know what you discover and let me know if you have any questions around what your credit score is and how to improve it and I’ll make sure I come back to you in the comments box have a great week guys and I will see you later in the week for lifestyle love ciao
Read More: How to MANAGE Your Cash Flow & Budget for EASY FINANCIAL SUCCESS || Money Monday
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