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#258 - Financial Literacy In 10 Minutes · Money Grows on Trees

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  I want to make this very clear. If you find something about investing or
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  money from a celebrity, probably don't listen because celebrities
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  are great at movies or they're athletes. They're not financial experts.
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  When it comes to investing, it's taking the cash you have now, buying assets
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  that grow into the future beyond the rate of inflation. And where people get stuck
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  here with their financial literacy is they think they have to know everything about
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  everything when it comes to investing. The best thing you can do is to carve out
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  what's called a circle of confidence. All you want to do first is to have an emergency
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  fund. That's the very first savings goal you should have. It's three to
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  six months worth of expenses. How you start out is you
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  have more money coming in than going out, you take some of the extra cash, you fund your
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  emergency fund. I'm Lloyd James Ross, seven-figure investor and
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  entrepreneur and I've helped thousands of business owners and professionals turn
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  financial stress into success. If you're stuck in old money
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  habits, overwhelmed by investing or unsure where to start, this
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  is for you. I'll give you the mindset and strategies to take control,
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  grow your wealth, and achieve financial freedom. It's time to
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  make your money work for you. All right, welcome to financial literacy
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  in 10 minutes. Let's go. Starting with the first one, budgeting. Budgeting
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  is a bit of a A scary word for some people, but let me
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  break it down for you very quickly. What you want to track every month is how
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  much cash is coming into your bank account and going out of your bank account. That's
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  pretty much it. How much is coming in and going out. Next one,
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  saving. All you want to do first is to have an emergency fund. That's the
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  very first savings goal you should have. It's three to six months worth
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  of expenses. How you start out is you have more money coming
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  in than going out. You take some of the extra cash. you fund your emergency fund
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  until it gets to three months of expenses or at least $5,000. That's the
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  first savings goal. Next one, number three, credit and
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  debt. When you buy things that don't produce income with credit
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  card debt, it's called consumer credit and it'll drown you. So
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  if you're gonna get a credit card, just get one, make sure it's got a small balance,
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  always pay it off at the end of the month. And if you're going to get any other debt,
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  make sure the debt can produce or buy things that are going to produce income. That's
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  when you have good debt. All right, that's the difference. So avoid consumer
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  credit. If you're going to get debt, make sure the asset you buy with it is producing income.
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  Not a good idea to get a credit card and buy Lebooboos. Okay,
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  next one, number four, financial goals. If you don't know where you're going, every
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  path will take you there. And most people are in reaction when it comes to
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  their money, and they're not proactive with it. So if you don't have a financial
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  goal, it doesn't have to be some huge thing. It could be as simple as saying,
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  I'm gonna pay this credit card off in the next 90 days. I'm
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  gonna have an emergency fund done in the next 90 days. I'm going to start
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  my investment account and build that up to $10,000 over the next 12 months.
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  I'm going to pay my mortgage off, or this much of my mortgage, or we're
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  going to have one family holiday instead of whatever it might be, okay? It's
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  just 90 day goals are super effective and then
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  12 month goals. You don't really need anything outside that because the small ones will
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  look after the big ones. All right, so that's number one, two, three, four,
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  that was number one, two, three, four, five, six is
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  insurance. One thing to consider with insurance is this, if you have low income
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  and low assets, then your insurance is
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  a bit of a pay-as-you-go lotto ticket, which is great. So
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  the less income you have and the less assets you have, the more important
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  insurance becomes. But on occasion, depending who you
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  talk to about your insurance, you can be put into insurance policies that don't
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  suit you, that are costing you a lot of money. So be very particular
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  with what you say yes to, all right? And of course, get
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  another rate on your insurance policy by just calling up
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  and shopping around for the right rate for your cover. You
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  don't have to go and spend a ton to get the best cover. So be very smart
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  with it. Just look around and shop around until you find something effective. As
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  you become wealthier, insurance is less important in
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  my eyes. Next one, number seven, investing. This one throws
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  a spanner in the works for so many people, but it's actually very simple. When
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  it comes to investing, it's taking the cash you have now, buying assets
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  that grow into the future beyond the rate of inflation. And where people
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  get stuck here, with their financial literacy is they think they have to
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  know everything about everything when it comes to investing. The best thing you
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  can do is to carve out what's called a circle of competence, a
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  circle or an area of assets or investments that you understand that
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  makes sense. And then once you have that circle, don't move outside the
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  circle. You don't have to be an expert at gold and silver and
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  Bitcoin and Ethereum and XRP and real estate
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  and residential and commercial and shares and penny stocks And
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  ETFs, you don't need to be an expert at all that stuff. You just
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  have to select one that's gonna be effective that you understand and then
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  scale it from there, right? You can diversify, but you can
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  also diversify, which means you have too many assets and
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  it's not giving you any return. So for me personally, I've selected, I'm
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  gonna have a business and I'm gonna buy shares and that's my whole
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  strategy done. I don't touch property. I just have one,
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  okay? I prefer just to stick with that. It's what
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  I understand and do well, and I'm done. You don't have to have
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  a hand in every single bush. So next one down, number
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  eight. Number eight? Number nine? Eight, nine? Banking.
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  Banking is interesting. You just have to have one core everyday
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  account. And then potentially a tax account set
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  aside if you're in business, or an emergency fund account set aside, whatever
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  the case may be. So one core current account that you use every day, an
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  emergency fund account where you don't touch that, you don't invest that, you just leave your
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  emergency fund in there. If you use your emergency fund, you retop it back up, and then potentially
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  an account for your tax if you're in business yourself, where your BAS goes in
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  there, and also your corporate tax goes in there as well. So you're planning
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  for paying your own tax. I don't know how many people I've spoken to
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  have got themselves in trouble not setting aside money for an emergency and
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  not setting aside money for their tax. You can have two or
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  three bank accounts depending if you're in business or not and that's as simple as banking needs
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  to be. You don't need to have 4,000 bank accounts and you certainly don't
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  have to know the ins and outs of all
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  the banking products. However, if you do have a mortgage, talk
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  to your bank about having an offset account from your everyday account across
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  your mortgage because an offset account, of course, if your mortgage balance is
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  here and your offset account is here, if your wages go into this account, bang,
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  the offset account, it drops your mortgage balance by the amount of cash sitting in there. If
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  you can, set up an offset account across your mortgage and talk to
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  your bank about something that's going to suit you for that. That's That's pretty much
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  all you need to know about banking. Just quickly, if you're ready to
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  take control of your finances but feel stuck on where to start, I
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  have a solution. My book, Money Buys Happiness, simplifies
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  investing and wealth building with practical steps to help you achieve financial
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  peace. Get your copy via the link in the show notes and let's get your
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  money working for you. Now back to the episode. Going to the next
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  one. We've got scams and fraud. This is huge. Scams and
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  fraud. I want to make this very clear. If you find something
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  about investing or money from a celebrity, Probably
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  don't listen because celebrities are great
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  at movies or they're athletes. They're
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  not financial experts and they haven't quite often walked the
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  path they're telling you to walk. They're there as an advertisement. So if you see a
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  celebrity of some sort promoting something, maybe reconsider that.
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  Certainly do your homework no matter what. And of course, if someone randomly DMs
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  you on Instagram without a verified account, especially without the blue tick,
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  especially, then you know that it's probably the best to stay away from that. If
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  they've outreached to you, it's not ideal, right? You wanna make sure you're making
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  the first move. So if you get some random DM or random WhatsApp and
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  you get chucked into some sort of WhatsApp group about crypto or Bitcoin, Just remove
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  yourself from the group. This is how frauds and scams happen. People
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  will deem you asking you for money. And if you're silly enough to give them the money, well
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  then perhaps you probably deserve to lose your money. But I'm here to tell you not to
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  do that, right? Please don't do that. Especially if my Instagram account
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  asks you for money, don't. Just be very careful, okay? That's how
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  scams and fraud happen. If you're uncertain about something, always
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  call up the vendor before you make a payment. It can happen with the postal service.
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  The other day I got a text message from the postal service that said, you owe us money.
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  I'm like, that's impossible, postal service. that doesn't make any sense to
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  me, and I didn't give him my money. So you gotta be just, if it feels a
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  bit off, generally speaking, it probably is, all right? So just
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  be aware of that. And the final one, number 10, for financial literacy,
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  comes to housing and cars. And if you've been following our channel for a
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  while, you know I'm not just someone who willy-nilly goes out there and follows the crowd
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  into housing, and I'm certainly not someone that goes and buys a brand new car for a lot.
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  So with housing, I had this saying, one car, one house, one spouse.
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  So one home, put a good deposit inside it so you're
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  not against the fence when it comes to, or against the ropes when it comes
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  to your mortgage repayments. You're not putting yourself in financial turmoil. Make
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  sure you're putting a large enough cash deposit in there to avoid mortgage insurance if you
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  can. Of course, getting your interest levels down. Always look for the best interest
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  rate. student of mine this morning said to me, Hey, I just went and
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  shopped around for new interest rate and I've saved myself, you know, half a
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  percent every year now. So shop around for a competitive rate with your
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  house, okay? But you don't have to go and buy multiple properties to
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  get ahead financially. You can just have a home, slowly paid
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  off over time and have one car if you can. That means
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  picking your spouse up to and from work if you can. If you need to have two cars,
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  fine, but doesn't mean you go out and buy a brand new car. When we first bought our
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  car, we bought it three years old, we were second hand, we saved
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  ourselves $90,000 in depreciation, which is a
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  real cost, and it runs perfectly, all right? So don't buy it too
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  old, but you have to buy it brand new, within your budget, and of course,
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  keep servicing it each year. I'm always pedantic to take my car when
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  I need to, when I'm told to, to service it. And it prevents
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  so many mechanical errors in the future. And of course, if you have
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  an electric car like a Tesla, less maintenance. And if you're trying to buy a car to
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  reduce operating costs, then something electric or hybrid makes a
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  lot of sense because it's less petrol, also less mechanical errors. And
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  it prevents a lot of cash outflow from your bank account by
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  having all these problems. and please don't be someone who goes out and buys, you
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  know, my neighbor, a lovely guy, and he's got like five motorbikes and
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  he'd have to insure them, he'd have to register them
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  all, he'd have to look after them, maintain them, and
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  I'm sure he can't ride all of them at once, but just be aware of
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  how many cars or other things or toys you're accumulating and
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  think to yourself, do I need all of them at once? And if you don't, it will
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  help you to mitigate any cash outflow and just
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  financial chaos in your life if you just have one toy. So remember, one
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  car, one house. So I hope you've enjoyed that
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  quick financial literacy in 10 minutes. That's pretty much what you
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  need to know to stay out of trouble. So share this with a friend, hit the subscribe button, and
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  leave me a comment below. Which particular one do you want to ask a question about?
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  Because if you leave me a question in the comments, I'll come back and I'll answer it
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  for you. So I'll see you on the next episode. Thanks for listening to Money Grows on
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  Trees. If you enjoyed the episode, leave a five-star review on Apple Podcasts
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  and Spotify and subscribe to us on YouTube so you never
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  miss an episode. And if you're serious about building wealth, make sure to
• 10:46
  check out the links in the show notes and follow me on all social media
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  platforms, at LloydJamesRoss for more. See