1890 Patricia clug and John W clug worth $5 billion and recognized as the richest man in the United States by Forbes divorced Patricia clug was awarded a significant sum of money in addition to a number of properties it was sufficient that she could have lived the rest of her life in luxury but she wasn't able to hold that for long and then a moment came when she was even compelled to sell her jewelry and other items and in 2011 she was finally forced to file for bankruptcy as a last resort so what exactly happened to
Patricia is the tale of every American who lives beyond their means even while having relatively High wages using credit cards up to their limit and living paycheck to paycheck did not set aside any money to cover unforeseen costs but the question is is it possible to maintain a comfortable standard of living despite having a little income are the risks associated with investing in the stock market for regular people manageable the answer of all these questions lies in one thing that is financial literacy with financial literacy all that is possible the thing is you don't need
to inherit a lot of money or having high salary to live a financially free life the answer lies in managing your finances better and efficiently and how one can do that that's what this video is all about this financial literacy comprehensive video will help you to understand why you need to consider financially uh literate and will delves into a number of categories and numbers into your basic everyday Financial living the basics of debt and understanding just sort of what credit card debt means we will cover all that so make sure to watch the video till
the end to understand the different Financial stuff that really can seem very basic but clearly is not subscribe to the channel and let's get started well financial literacy starts with the need to worry about your spending and the worry about whether or not you will be able to accomplish your goals when you retire if you want to be financially literate there are four aspects of personal finance that you need to be aware of and properly manage let us discuss those that begin with our income now most of you will think that you already have an
idea about income but again it is much more than just a few bucks in your hand periodically you can think of it like your personal stream of golden coins but instead of coming from a Cave of Wonders it comes from your hard work and Savvy skills and the first rule of financial literacy Club it talks about income a lot because my friends knowing your income is like knowing the secret menu at your favorite burger joint it can get you the best bang for your buck now let's take a look at Joe's jovial journey to maximizing
income Joe is your average guy but he's got dreams bigger than a giant bean stock and he knows the first step to climbing that stock is understanding the dough that's coming in Joe's a barista at Spill the Beans the busiest C coffee shop in town he's whipping up lattes with the Precision of a surgeon and the grace of a ballet dancer his boss notices and Bam Joe's got a raise why because he's added more foam to the cappuccino of value he's become the cream of the crop so to speak but Joe's a Smart Cookie the
kind that goes perfectly with a cup of joe he realizes that income isn't just about working hard it's about working smart so he starts learning about the law of comparative advantage it sounds like something you'd expect in a treaty but really it's about playing to your strengths Joe's not just good with coffee he's a people person he remembers every regulars order and story this skill makes him stand out like a peacock in a hen house Joe's boss starts having him train new employees because Joe's got a knack for it he's like the Yoda of the
coffee World small but m in wisdom this my friends is Joe adding extra shots of value to his work and that's the first requirement for gaining that extra income you need for a financially free life here's a little joke to lighten the beans I mean why don't secret agents retire because they love their jobs they always say I'll be back just like our Buddy Joe who's always on the lookout for more ways to learn and earn and speaking of earning remember the age-old saying it's not about the hours you put in but about what you
put into the hours that's Joe all over he could blend in sure but he chooses to stand out like a lighthouse in a fog of mediocrity now imagine if Joe took his passion for coffee and started a Blog he writes about the difference between araba and Robusta the proper milk to Coffee ratio for a latte and the Art of the perfect foam people start tuning in they love his simple down-to-earth chats about Beans and Brews Joe's blog starts generating ad Revenue that's Joe's new income stream trickling in like a fresh brew on a Monday morning
he's not just making money he's making more money while he sleeps that's passive income my friends like having a Golden Goose in your backyard now this is financial literacy at its finest it's not just about counting your coins it's about making your coins multiply like rabbits smart right and to seal the deal with a cherry on top let's pull in a quote from the master Money Maker himself Warren Buffett if you don't find a way to make money while you sleep you will work until you die Joe's taking these words to heart and so should
you in this story Joe turns his job into a gold mine all by being a bit savier than the average Joe he found what he did best and did it so well that his boss couldn't help but notice that my friends is the Symphony of income played to Perfection so take a page from Joe's book play to your strengths be the unicorn in a field of horses and watch as your income stream turns into a river maybe even an ocean who knows with enough smarts hard work and a Sprinkle of humor you might just be
the next Sultan of fin financial literacy and that's who you can think and make income next part of financial literacy is which everyone loves to hate expenses you know the cash that flies out of your wallet faster than a superhero in a hurry yes we're talking about the money that goes bye-by as soon as your paycheck says hello well let's break down expenses which many also called the necessary evil a imagine you're at a party and your money is like the snacks on the table your expenses are the guests gobbling them up now you want
to be a good host but if you let your guests eat all the snacks mean your money you won't have any left for the next party that's why tracking your expenses is as important as a superhero keeping an eye on the villain so what's the superhero tool we need for this Mission a budget it's like having a financial sidekick budgets are like gym memberships every everyone gets one at some point but actually using it that's the real workout let's take a look at another hero for our financial literacy Saga Betty Betty's a graphic designer who
loves two things creating art and buying fancy coffee she earns $3,000 a month but her magic number for expenses $2,500 Betty's got to pay for her art supp rent and yes those latties that keep her going the first rule Betty follows is keep the fixed expenses lower than the income that's the financial version of eating your vegetables before dessert and let's be honest nobody wants to live on a dessert only diet same goes for spending more than you earn now Betty uses the 50 30 and 20 rule like a pro she's got it down to
a science just like how she knows her coffee to cream ratio 50% of her income goes to the must haves that's rent utilities and art supplies basically if it keeps a roof over her head and allows her to create her masterpieces it's included here so in case of her earning of $3,000 a month $1,500 are reserved for this portion the remaining 30% goes into the war chest for future battles paying off debt and saving think of it like Batman's Gadget fund you always want to be ready for what's coming now Betty has made some clever
decisions and this 30% portion is directly transferred to her savings account every month when her account is being credited so it's all automatic and she don't need to count money and keep them separate the final 20% is for the fun stuff the jazz hands of her budget this is for concerts those fancy coffee treats and maybe a cape if she's feeling extra heroic in all this what many people do wrong is is they don't stick with this 20% and then have to cut money from the other two portions so it's very important that your fancy
treats new items shopping Etc don't exceed this 20% Betty knows if she spends like she's got a money tree she'll end up playing Financial catchup like a dog chasing its own tail not a good look right now if you don't follow any budget what will happen you see not budgeting is like going on a road trip without a map you might have fun for a while but you'll probably end up lost or worse at a dead end people without a budget often live life in the rear view mirror paying for yesterday's fun with today's money
it's like buying a jet ski on a whim sure it's all waves and high fives at first but when the bills roll in that jet ski is like an anchor dragging your finances down to Davey Jones's Locker there is a lot of of stress related to these Financial missteps living without a budget can be as stressful as trying to thread a needle while riding a roller coaster it's all ups and downs and mostly screams Financial Guru Dave Ramsey says a budget is telling your money where to go instead of wondering where it went and let's
face it nobody likes playing detective with their own bank account when Betty sticks to her budget she's living life like a superhero flying toward the Horizon always moving forward with each Smart Financial Choice she feels less like she's wearing a money straight jacket and more like she's Dawning a cape of Freedom so that's why expenses aren't the villain of our financial literacy story they're just part of the plot by taking control with a budget we can all have a blockbuster ending to our financial Saga where the hero that's you lives happily and and comfortably ever
after next time you check your bank account remember be the Betty be the budgeting superhero you were always meant to be all right income and expenses are one side of the coin of financial literacy to Achieve Financial Freedom and be Financial literate you need to understand the other side too that other side has assets and liabilities now first of all let's discuss assets now contrary to Common beliefs assets are not just fancy cars and sprawling houses they're everything you own that's got value think about it like your superhero gear it's everything from your trusty savings
account to that comic book collection you swear will be worth a fortune someday assets are like the seeds you plant in the garden of your financial future nurturing them promises a lush Bounty over time assets my friends are the superheroes of your financial Universe they're not just static figurines on the Shelf they're more like Captain America's shield or Thor's hammer they can actually grow in power AKA value over time we're talking about everything from your good old savings account which might feel more like a sidekick right now to the Heavy Hitters like property and stocks
now why ask assets are necessary is because of their growth trajectory imagine assets as trees in your money Orchard some are slow Growers like the sturdy Oak think real estate others are more like bamboo capable of quick growth spurts akin to stocks in a bull market overtime if tended well these assets typically increase in value it's like planting a Vineyard it takes time but one day you'll be making your own wine now even if you're in high school with a part-time job you're already in the asset building game start by nurturing your savings picture it
as Watering your plants a little bit consistently goes a long way it's not about the amount it's the habit of regularly contributing to your own asset pool that $5 or $10 squired away regularly is like planting saplings that will one day be Mighty redwoods in your asset Forest let's meet Jordan a High School junior gets a part-time job and starts saving $10 a week fast forward and Jordan's in college with a growing savings account thanks to the miracle of compound interest we'll get to this superhero soon then Jordan lands a decent job and begins to
invest transforming savings into stocks bonds and maybe a little piece of real estate before you know it our friend is not just just surviving but thriving with a diverse portfolio of assets that started with the humble $10 a week strategy now here's where the magic happens savings morph into Investments and Investments have this uncanny ability to multiply imagine turning your savings into a Golden Goose through Investments sure the goose may not always lay golden eggs but over time you're bound to get a decent omelet going and when you are investing considered diversification as your financial
potlock you wouldn't want a table with just chips right similarly you need a mix of assets some safe bets like bonds are your mashed potatoes not thrilling but comforting then you've got your stocks the spicy wings that could either be a hit or require a lot of napkins by spreading your assets around you're making sure that if one dish bombs there's still plenty left to Feast on now if you got confused in all all that just remember that saving is like storing acorns for the winter the more you gather the less fretful the cold months
are investing is like having a fleet of ships out at Sea some might face storms but not all will sink and many will come back Laden with treasures compounding interest is like a snowball rolling downhill Gathering Mass the longer the hill the bigger the snowball now speaking of diversification in investment you've got options from sidan to convertibles in the investment World index funds they're the reliable family van getting you where would you need to go without the fuss ETFs they're the sporty cars with a bit of zing and a capacity to make your portfolio quite
zesty and individual stocks those are the motorcycles thrilling uh but you'd better have a good helmet mean you you would need to use your brain and do your research before jumping Warren Buffett the Oracle of Omaha himself advocates for a simple yet effective approach do not save what is left after spending but spend what is left after saving this right here is the core of asset accumulation it's like saying eat your dinner before dessert it ensures you've got the nutrients savings before the Indulgence spending all right now let's sprinkle some of that Financial fairy dust
called compound interest Albert Einstein revered it for a reason the most powerful force in the universe is compound interest compound interest is the financial equivalent of a spell that turns your assets from toads into princes over time the sooner you start the more powerful the spell if compound interest were a character in a fantasy novel it would be the Wise Old wizard whose magic intensifies with age but in our fairy tale the hero doesn't slay dragons or rescue Royals from Towers they conquer the world of assets they start small with a piggy bank and end
up commanding armies of stocks bonds and properties the effect of compounding over a period of 20 or 30 years can add up to hundreds of thousands of dollars when it comes to typical families in the middle class the difference between beginning to save at age 50 as opposed to beginning to save at age 25 might be hundreds of thousands if not millions of dollars and this is due to nothing more than the simple passage of time and the opportunity to put that money to work for them over a longer period of time if you start
with $200 and make an additional 5% on that you will then have $210 you are going to make an additional 5% profit on the 210 which results in a total of 22.5 an additional 20 that means that the 5% interest will be applied directly to the total because of compounding your $200 will turn into $210 in the first year and then a 5% increase will be put to that total and that will grow it to $220 now again the 5% will be applied to this 220 and so on therefore the numbers begin to diverge from
the denominator that was initially used for the money as a result of this the process of compounding brings with it a true particular force in terms of mathematics this Alchemy of turning savings into assets and assets into more assets is the core of wealth building it's not quick it's not always sexy but it's effective each dollar you save is a soldier in your army each investment a battalion each compounding interest calculation a strategy that helps win the war against Financial instability so let's remember assets are powerful compound interest is Magic and your financial journey is
the most epic tale you'll ever write in The Saga of financial literacy amassing assets isn't just an objective it's an adventure that spans a lifetime with the promise of a golden treasure waiting for those who are patient and wise by the way if you're enjoying this video so far and want more content like this comment the word more so I'll notice all right now let's jump to our next important term in this journey of financial literacy which is to understand liabilities all right let's break it down picture this you're at a dance right and you've
partnered up with liability ities yeah that guy he's the one who looks fun at first offering to buy the drinks promising you a wild ride with your credit card but by the end of the night you realize he's been stepping on your toes and you've racked up a tab you can't pay so let's talk about financial literacy and how not to let liabilities lead you into a dance you can't exit gracefully now imagine your money is like a bar of soap the more you handle it especially carelessly the smaller it gets that's liabilities for you
slippery and tricky remember what Warren Buffett said a 14-year-old shareholder at the 2004 birkshire Hathaway annual meeting it would be just to don't get in debt it's very tempting to spend more it's very understandable but it's not a good idea and if you're deep in the red it may be a good idea to never look at a credit card that the rest of your life that's Sage advice but liabilities Whispers sweet nothings about buy now pay later and suddenly you're spending what you haven't saved not all liabilities are the villain in your financial story some
like student loans or mortgages have the potential to be the kind of Frenemies you don't love them but they can help you out a student loan is like a gym membership for your brain it's painful it's expensive But ultimately you come out stronger smarter and hopefully more profitable let's say our friend Bob takes out a loan for his education he's investing in his own Bob 2.0 upgrade sure he's racking up debt but he's also boosting his future paychecks power if managed well Bob's debt could be like a seed that grows into a Mighty Oak of
earning potential but then there's the Dark Side of liabilities like credit C debt it's like eating too much junk food it feels good at the moment but then you are going to regret it later this is where credit cards can turn from being the life of the party to the guests that just won't leave imagine Sally goes on a shopping spree she buys a surfboard designer clothes and treats her friends to fancy dinners all on her trusty card she's living the high life but the debt it's mounting up like dirty dish is after a banquet
and the interest is the pesky fly that won't buzz off that's why when we said financial literacy isn't just about reading numbers it's about understanding the juggling act between your assets and liabilities think of your finances as a seesaw on one end you've got your assets let's call them your financial superheroes on the other end you've got liabilities the villains the goal is to keep the Seesaw balanced think think of avoiding bad debt like dodging dodgeballs you need agility strategy and sometimes quick reflexes that's financial literacy in a nutshell knowing when to duck when to
weave and when to catch the opportunity take Jeff who's juggling multiple credit cards he's playing a dangerous game of financial twister left foot on the gas bill right hand on the grocery tab it's all fun and games until he slips on the interest rate and lands face first in a pile of debt now for the gripping finale escaping the clutches of liabilities picture yourself as the superhero in your own Financial action movie you're tied to a ticking debt bomb and the only way out is through a calculated clever plan you need a budget a map
to navigate the treacherous Waters of spending and you need an emergency fund your life Fest for when the ship hits an iceberg think of these as your financial utility belt every superhero needs one and here's a gem from none other than Benjamin Franklin beware of little expenses a small leak will sink a great ship that's your cue to plug those leaks and steer your vessel clear of the stormy seas of debt so to wrap it up my financially Savvy friends liabilities are like that one friend who's a blast to hang out with but always gets
you into trouble learn the dance steps of financial literacy and you'll be two stepping past debt and Waltzing towards a secure financial future and remember in the Grand Ballroom of Life make sure you're the one choosing the music and there you have it my friends a comprehensive financial literacy video I hope you enjoyed now if you are interested get any audio book of your choice for free using the link below the video remember this video is for educational purposes only and does not constitute investment advice it is important to conduct thorough research and consult with
financial professionals before making any investment decisions for more financial knowledge I recommend you watch the next video in our series don't hesitate to share this video subscribe to our Channel and share your thoughts in the comments section thanks for watching and I'll see you in my next video
