[00:02] cover a $1,000 emergency expense. And that includes people making over six figures. So clearly, you can see that being poor isn't just about income. If that you're making, you're going to feel broke no matter what. The difference
[00:15] broke and someone who actually builds wealth isn't about income. It's usually going to share with you five things that fix each one. Starting with number one, you have no idea where your money is
[00:29] actually going. I actually spoke to a group of college students last Saturday and I asked for a show of hands. Out of 80 people, how many people track their raised their hand. Avoiding where you stand financially is actually one of the
[00:42] everything else is harder to fix if you aren't even aware of your baseline. In people would rather deep clean their bathroom with rubber gloves and everything rather than check their savings account. That's according to AJ
[00:56] Coin, the chief marketing officer at the big UK online bank Monzo. This is a habit that is so common that behavioral economists have actually given it a effect. That's where we would rather bury our heads in the sand than face the
[01:09] information. I did learn for this video that ostriches are just turning their eggs that are hidden under the sand when they do this. So, they're not actually is named after them. Now, in this research paper, they found that quote,
[01:23] "People who don't regularly check their accounts show much more volatile payday. And people who infrequently check their accounts tend to spend significantly more on discretionary purchases compared to regular account
[01:35] checkers." So, an easy fix here is to start getting into the habit of checking your finances regularly. Even just installing one of those many popular tracking it with, let's say, a pen and paper or your notes app, that could be a
[01:48] Now, another place where people are wasting a ton of money is simply just subscription audit as well because according to the data, people on average think that they spend around $86 a month in subscriptions when in reality the
[02:02] actual amount that people spend on subscriptions is over $219 per month. Almost one in three people underestimate how much they spend on subscriptions by $100 to $199 per month. It's so comical that I think you have to read this tweet
[02:16] you can subscribe to any service instantly and they take your money with suddenly you need to call their helpline, which is always too busy, and so you have to find a dragon to fly you to Mordor to slay your subscription in
[02:29] the flesh." I know it's somewhat ironic and a little bit comical, but it's true. your money as simple as one click in many cases. But when it comes to hoops or make you take a 100 different steps to do so. So, with subscriptions,
[02:43] subscriptions in a list somewhere and try to evaluate each one to see if worth the price to you. If you can't definitively answer that the subscription is worth it to you, then I think that that's a good signal that you
[02:56] this awareness section is that you have to start facing your finances and you think the sooner you actually look at your finances, the better off you will Sometimes you know exactly where your money is going and you spend it anyway.
[03:10] which is that spending isn't just an awareness problem. It is also an emotional one. This one is particularly tricky because spending emotionally doesn't feel like a problem. It may just feel good or it may make you feel better
[03:23] if you're feeling sad. About 5% of people have what's called a compulsive that they're addicted to shopping. Now, even if you're not in that 5%, I think everyone still has some sort of version of emotional spending that they might
[03:36] I was sad or lonely, I would treat myself to a vanilla ice cream to make That's actually one of my favorite flavors of ice cream. Even though people flavor out there, but you know what? They are my taste buds at the end of the
[03:51] day. And I think vanilla is the finest of the flavors. Now, realistically, this would cost me maybe $7 at most. But the point here is similar. If you've had a something, whether that's a sweet treat like me or something that you buy
[04:04] it might feel good for about 15 minutes, but then the money is just gone. Now, susceptible to emotional spending, you can build a skill to prevent it. Studies is negatively correlated to compulsive buying. So, that means the better you
[04:20] are at regulating and recognizing your emotions, the less likely you are to personality trait, after all, that you are stuck with, and it's something that thing to manage, in my opinion, is what's called social spending. That's
[04:33] because of what your peer group is doing. On average, people spend $250 a month on activities just with friends. That's over $3,000 a year, which if you watch this channel, you should know that that can compound to a lot of money
[04:47] later on in life. According to ally.com, 44% of Gen Z and millennials say they've skipped major social events because of the cost. So, you're either spending you're missing out and getting FOMO. I think it's a lose-lose situation if you
[05:01] spending. So, how can we fix these things? I think there are two things that we can do that's really actionable for spending emotionally. I would go through this checklist. And if any of the answers are no to these questions, I
[05:13] Number one, ask yourself if you actually need this item. Number two, ask yourself if it brings you closer to your financial goals. And number three, ask and if you are clear on this purchase. just going through this checklist and if
[05:27] any of these answers are no, you might want to take a pause and that could second thing that you can do for the social spending piece is to actually be honest with your friends about money. If spending money on a lavish dinner or
[05:40] trip will seriously cost you a lot or set you back either for your budget or you should say that and vocalize it. You'll have some friends that respect the true day ones and the true friends that you stay with. Emotional spending
[05:53] and social spending are usually small purchases that add up over time. However, my next point is the complete opposite. It's all about the big for over and over again is that they think since they're so diligent and
[06:06] throughout the month that they suddenly justify a large purchase of a,000 or $2,000. Now, sometimes I think it's perfectly fine to make that oneoff big purchase, but if you're locking yourself into an expensive recurring payment like
[06:19] going to get in trouble. Cars and housing usually make up 50 to 60% of most people's monthly expenses. So, if you get one of these wrong, no amount of skipping lattes or cutting subscriptions is going to help that much. With cars
[06:32] right now, the average payment for a new car is $750ish a month. And nearly 19% of people who have car payments are over $1,000 a month. The problem people are running into here is that as long as the payment feels manageable, people start
[06:45] to take on longer and longer loans. I talked about this in my car loan payment term is now over 68 months. And the worst mistake is that once people pay off a car, they go straight into a new car loan instead of driving their
[06:58] would save them the most money. Housing is a similar story. The median price of is a similar story. The median price of a new home is around $410 to $450,000 as of 2026. And a huge chunk of people cannot realistically afford these homes.
[07:11] So what happens is that people overextend themselves on a loan in order to live the so-called American dream. So what's the solution for both of these issues here? It's abiding by affordability rules. For cars, there's
[07:23] great rule. Sometimes you could even go 2510, but let me first explain what the numbers mean. The 20 stands for putting 20% down on any car that you can buy. The four stands for you should finance the car for no more than 4 years. And
[07:37] total transportation costs under 10% of your gross monthly income. Now, you That's definitely doable, but the idea is that you want to keep the 10. That's the 10 is the most important there. It's the monthly recurring cost, and that
[07:51] should be under 10% of your gross monthly income. So, if you make $84,000 a year, that's $7,000 gross income per month. So, your total car costs for that car payment should be under $700 a month, as an example. For homes, you
[08:03] want to use the 28% rule. Now, this is very conservative, but that's where your principal, interest, taxes, and insurance, that should not exceed 28% of your gross monthly income. So, on a $400,000 home, if you add in everything,
[08:17] the payment is around 2631 a month. That means the required salary to be affordable is around $112,000 using the 28% rule of home buying. This taxes and insurance, by the way. And I assume that you already had a 20% down
[08:32] payment saved up. Now, you can see that it's much more difficult to afford a home based on the affordability rules compared to what you can qualify for from the banks. Banks will often let you qualify for much more of a house than
[08:44] is that you get overextended on your loan. The uncomfortable truth here is wealth isn't always about finding the next best investment. It's just doing of a car than you can qualify for or keeping your housing expenses as low as
[08:59] biggest impact for you. All right, this next point isn't about spending or how you manage your money. Point number four is that most people manage their money very poorly. And in fact, 92% of people never achieve their goals, not
[09:13] due to a lack of ambition, but because they just have no actionable plan. And when it comes to money, if you have no plan, you are going to get behind. for example, like an afterthought. Money comes in, they pay their bills, then
[09:26] throughout the month, and then whatever's left over, if anything, will go into savings. The problem is is that there's usually nothing left over. So most people don't have anything or they just go into debt. Now, luckily the fix
[09:38] people think about money, which is that you actually need to save first and then around. If you can automate your savings, you will save more money according to this paper conducted by the Consumer Financial Protection Bureau. In
[09:51] their study, their participants on average saved double, so $167 a month compared to $80 a month when they enrolled in some sort of automatic really simple. You can't spend what you don't see. So, if the money moves
[10:05] checking account, you're not relying on discipline or remembering to do it every month. Savings just happens naturally and then it can flow into other goals and investments seamlessly. If you want to watch my full paycheck routine video
[10:18] that uh down below so you can watch it after this video. It will teach you all going into after you get paid. Now, my next point today is probably the easiest to fix and it's one that frustrates me the most whenever I talk to people. And
[10:32] point number five is you should take advantage of any free money that comes "Well, yes, sir, Captain Obvious. If I had free money, I would definitely pick it up." In actuality, these statistics are showing me differently. For example,
[10:44] often times employers are going to offer you a match where every dollar you matched by your company. So, if you put 5% of your salary in and your company matches that, it's like you just doubled that money instantly for free. Nothing
[10:58] beats a 100% immediate return. Yet, roughly one in four workers don't contribute enough to their 401k plans to even get a full match. And the average even get a full match. And the average amount left on the table is around $1,36
[11:10] life-changing number, but with compounding over 40 years, that's plus that is foregone just for not participating in a full match. Now, to be fair, if you're earning under $40,000 a year, for example, contributing to a
[11:24] 401k might feel impossible when you're just trying to keep the lights on. And I someone who's making decent money and you're just not contributing enough get around to it, then that's the problem I'm talking about. At this
[11:37] table, not because you can't afford to save, but maybe you just don't have time today. If you have a 401k through your job, check it this week, not next month, to check it this week. You want to log in, look at what your company matches,
[11:53] least enough to get every dollar that they match. This might take only 10 thousands of dollars over your career. So, I think it's well worth your time. 401k? Let's say you're in another country or perhaps your employer doesn't
[12:08] offer it. In that case, I would look into any tax advantage retirement the US, perhaps you could look at the Roth IRA, for example. The main earnings and profits grow taxfree. So that means when you retire and you
[12:22] account, you won't pay any taxes on it. While this isn't really free money per highest ROI activities you can do when you're bad with money because it will funds to zero if it's within this account. If you want more information on
[12:37] that account, that will also be in the 2026 full paycheck routine video I to be rich to do any of the things that we talked about today, but you do need to start, especially if you're feeling a little bit behind or just not in the
[12:50] this far in the video, thank you for being here. Now, I want to do something you're listening, I want you to comment personally heart and reply to your comment within the first few days of the
[13:03] let's say, 6 months in the future, drop a vanilla in the comments anyway, and fun. And if you want to check out that referencing today, I will leave it right here on the screen. And I will see you
[13:16] guys in a future video on the channel or just this one.