[00:00] If you spend $5 on a morning coffee on your way to work, $4 on overpriced transport, and $1.40 on unwanted subscriptions every day,
[00:16] then that's the same as spending $10,000 every single year. As soon as they get paid, the money just seems to disappear, because being careful with my money in my late teens
[00:33] to become the first millionaire in my family. I did every time I got paid, so you can apply them too
[00:45] This will not only help you save extra money, and the beauty of all of this, you won't have Right, let's imagine you've just been paid.
[00:58] Believe it or not, this is one even though it sounds simple, especially nowadays, that they find it hard to cut down
[01:12] These might seem small and insignificant, these little pleasures are actually robbing you I still want you to do this exercise.
[01:26] that are draining your money. and split it into two columns, so you've got wants and needs.
[01:39] It's probably best to get around six months worth you repeatedly spend money on every month. Unless you are repeatedly buying a lot of random stuff,
[01:54] I'm more interested in focusing on those little purchases it's time to sort them into the correct column. bills, and other utilities.
[02:09] then it's not a need. restaurants, bowling, golf, whatever floats your boat. out how much each column costs per month.
[02:26] and utilities add up to $1,200 a month. also known as your financial baseline.
[02:41] to see how much you've got left over. under 50% of your total income, I think it should be closer to 25%.
[02:57] as something you can't change as there are things you can do You might need a car, for example, that costs so much?
[03:12] Some apartments can be mega expensive nowadays, but this is where you need to start weighing things up. So consider moving somewhere that you can actually afford.
[03:28] to save up some money that you can invest, Look, maybe you don't want to cut back anymore, but it's worth seeing if there are some areas
[03:42] without impacting the quality of your life too much. you're gonna have to increase your income, by getting a promotion or start a side hustle.
[03:55] than your saving potential. of your paycheck might sound a bit impossible right now but I really do understand
[04:10] I didn't grow up wealthy to boost my income to hit a financial baseline but trust me, if I can do it, so can you,
[04:24] especially with all the online side hustle opportunities then just earn more money. Just treat my 25% rule as a target to work towards.
[04:40] add them all up and subtract them from your wage. Ideally, this should be below 25% of your paycheck to start getting you ahead.
[04:52] into a high interest savings account. of your paycheck left at this point. However, that's not gonna help you build your wealth.
[05:08] into a high interest savings account. it's just too tempting to spend it. an Ally Bank in America.
[05:23] on when you're watching this video. around 4% interest a year, which is around 0.05%.
[05:37] "I know a bank account with 7% interest." to lock away your money for a set amount of time to act as a safety net
[05:53] It's not there to make you money, so locking it away against the point of doing this. to have a safety net.
[06:06] but that's because it's great advice. and at some point, an emergency will come your way. for you when you need it.
[06:20] or the car broke down, you'd be able to cope I must reiterate that this money's only and not just something to dip into when you're running low
[06:34] It's just shocking to me as of May 2023, So if something went wrong, which it will, and would most likely have to take out a loan,
[06:49] with them paying crazy interest rates So how much should your emergency fund be? to five months of your baseline figure
[07:02] Even better if you can stretch that to six months. So once you've put by 20% of your paycheck for enough months to the next places we're gonna be talking about.
[07:16] of your paycheck left by this point. Well, next is the only place Let me explain.
[07:29] a guaranteed profit, then I'd say run away It's normally the grift that's feeding people this garbage. However, in this instance, it's 100% true
[07:42] I mean, why bother investing in stocks for a possible eight to 10% return when you can have a guaranteed 25% return that's constantly eating into your wealth every single day?
[07:58] to eat and exercise routines inside their body sucking away all the nutrients. of that parasite as it's pretty much guaranteed
[08:14] then I would recommend putting the remaining 30% There are two really common methods that you can use The first way is the avalanche method,
[08:28] because you pay off the debt So let's see how this will work in the real world. Debt A is for your credit card
[08:40] and it's $5,000 with an interest rate of 20%. Debt B is a loan from your family of $1,500 And debt C is a car loan for $2,500
[08:54] If you decide to pay $500 per month towards your debts using the avalanche method, this would firstly all go towards debt A until it's paid off
[09:06] and you'll end up paying $515 After this, your $500 payments would go into debt C,
[09:18] which would include $98 and 13 cents of interest. as your family are probably getting a bit impatient
[09:30] and obviously you'd pay no interest. you'd be debt free in 21 months and pay approximately $613 in interest.
[09:42] This is the psychological way to tackle debt The thinking behind this is it makes you feel So you'd pay debt B first,
[09:56] However, if you use this method, and cost approximately $1,700 in interest payments.
[10:08] and over $1,000 more than using the avalanche method. it'll be worth it in the long run. and paid off any high interest debt,
[10:21] you can put that combined 50% towards growing your wealth. is a tax advantaged investing account. of it right away, go to the store and buy something
[10:34] If you own a property, you'll pay property taxes every year. you'll be hit with capital gains tax.
[10:46] but luckily, there's a legal way If you're in the UK, and if you're in the US, you should get the equivalent,
[11:00] which I've discussed in past videos, to invest without worrying about taxes. of your excess money into one of these accounts
[11:16] and invest it in a low cost index fund like the S&P 500. around about eight to 10% tax free per year. and this shouldn't be taken as financial advice.
[11:31] so it's important to understand the risks involved. Just imagine if you invested $250 per month, you'll have 1.3 million in 45 years time
[11:47] Feel free to head over to do the math for yourself. However, if you're consistent,
[12:00] One of my favorite investing platforms is Trading 212 Since I was planning to talk about their app anyway,
[12:12] in sponsoring this portion of the video. worth up to 100 pound to anyone that uses the code Tilbury when they create an account.
[12:25] Both of you will get a free share to set things up on autopilot. between you and your investments.
[12:41] That's why it's best to just set up auto investing. and most of the time, you don't even notice it's gone and have a nice surprise.
[12:54] on Trading 212. which is about six and a half US dollars, of a coffee a day into the S&P 500.
[13:07] since he started its experiment, and as you can see, he's actually invested 1,503 pounds and his investment is now worth 1,707 pounds,
[13:21] which is a 13.68% return on investment. that he completely forgot about this experiment It was a lovely surprise.
[13:33] I'll walk you through it now. to get your free fractional share worth up to 100 pounds, just head over to the portfolio icon
[13:46] and then click on pies and finally create a pie. then click on build a custom pie, add instruments, and then search for S&P 500.
[14:00] that offer essentially the same thing. of the oldest and most trustworthy companies in the game. I also prefer the Accumulation Fund, which is this one here,
[14:17] which is essentially a reward the company gives you So just click on the fund, add to pie, and then make sure to select auto invest
[14:33] Here you can choose how many years you want to automatically invest for, how often you'd like to invest, The longer you can keep this going, the better.
[14:45] if you keep your money invested for over 10 years. on actual stats. but of course, take it with a grain of salt
[15:00] what the stock market is gonna do. However, I think for 99% of people, I used to think of this style
[15:14] even though your capital is always at risk I knew I wanted to be a millionaire one day, I'd have to wait until I was old and gray.
[15:27] through different businesses, at the same time as building those businesses. high reward plays.
[15:42] so if you're happy waiting years to make your first million, However, if you're anything like me when I was younger, Most people online will either teach you the slow lane
[15:56] just discussed, or the fast lane, of getting greater rewards. as I've traveled down both of these paths.
[16:09] of my paycheck towards starting a side hustle You may think that doesn't sound enough but I have a different opinion.
[16:24] especially in the early days of starting a side hustle, which lets you find gaps in the market that most people Now with the final 5%, I'd make the riskiest investment
[16:42] I've avoided talking about this that it's gaining popularity year after year. I've got about 5% of my investment portfolio in Bitcoin
[16:56] However, I'm very aware this is very risky So as long as you are okay with that, If you wanna know why net worth goes crazy
[17:10] but don't click on it just yet. Okay, I'll see you over there.