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if you ever try to get out of debt or
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stop feeling broke chances are you
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failed having spent seven years working
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in finance I've witness middle class
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habits that consistently keep people in
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the rat race today I'm sharing from my
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personal experience six of those habits
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and how you can avoid them middle class
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habit number one so I grew up lower
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middle class we were never broke but we
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were definitely extra careful about what
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we bought my mom would always make sure
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that we bought things on sale or at the
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very least had a coupon handy so you
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best believe when I received my very
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first big boy paycheck in Corporate
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America I was freaking out like I
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thought I had made it like Mama we solve
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poverty and I remember that the very
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first thing that I did was I went to the
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supermarket I walked along the aisle and
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I grabbed a $6 pint of bed and Jerry's
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chocolate therapy ice cream because I
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don't know about you but growing up Ben
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and& Jerry's was the bis ice cream brand
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and then I think I bought it a few more
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times that week and that's when I
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realized middle class habit number one
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which is lifestyle inflation
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most middle class people decide to spend
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more money as their income goes up maybe
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you decide to take out a loan to buy a
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new car move into a bigger apartment and
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start buying organic free range avocados
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the problem is when you start to spend
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all the extra money you make you'll
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never end up Building Wealth nasam talb
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once said the three most harmful
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addictions are heroin carbohydrates and
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a monthly salary because eventually
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you're going to become a prisoner to
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your own job your golden handcuffs get
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tighter and shinier because you need
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your a bi-weekly paycheck to pay off
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your debt and to sustain your new
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Lifestyle the only way to break free or
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to make sure that you never fall for the
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golden handcuffs is to know exactly how
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much money you should spend and save the
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general rule of thumb is the 50320 rule
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basically 50% of your take-home pay goes
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towards your needs like housing food and
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utilities 30% for your wants your
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vacations entertainments and Mr magic
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lamp and 20% to your savings so if
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you're making about $6,000 a month3
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would go towards your needs 1,800
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towards your ones and 1,200 towards
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savings for future Investments but you
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need to know that the 50320 rule isn't a
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one-size fitall solution it's just a
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good starting Baseline to help you
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understand your own personal financial
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situation and then you can readjust the
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ratio accordingly personal finance is
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personal for a reason middle class habit
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number two so back in 2015 I was doing
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an internship in Ohio for the summer and
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2 weeks before I was supposed to drive
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back to New York I got into a really bad
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car accident with four cars my car was
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basically towed to the mechanic and they
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said that it was going to cost around
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$55,000 to fix and immediately I began
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to spiral because I had no idea how I
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was going to pay for $5,000 but I
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absolutely needed to because I had to
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drive up in 2 weeks and my sublight was
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about to end but I think like 10 minutes
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into my panicking I suddenly remembered
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that I saved up an emergency fund for
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stuff like this and that's when I
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realized middle class habit number two
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and it's not having an emergency refund
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it's basically a cash Reserve that's set
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aside for financial emergencies which
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does not include a wild Night Out
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Vacations or fried chicken Cravings the
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money should only be used when all hell
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breaks loose when your house gets
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flooded when you're stranded in the
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middle of nowhere and have no other
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options basically when your life is
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Fubar now this is really important
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because you do not understand how much
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your brain is constantly focusing on the
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worst case scenario in case you're run
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out of cash because you're in some sort
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of emergency and you can't pay for it so
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by having this buffer it really frees
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you up mentally so you have less stress
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you have more time to focus on other
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things the good news is determining how
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much you need in your emergency fund is
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simple open up a spreadsheet and take
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account of all your monthly expenses
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rent loans bills the golden rule for
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your emergency fund is to save 3 to 6
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months of your essential expenses so if
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that's $3,000 for you then you want to
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save up to
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$188,000 but I understand that saving
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this much might seem impossible and
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honestly I had a lot of trouble saving
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this much too at first so for me I found
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that the most effective way to save
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money is with this thing called
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Financial automation studies showed that
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this helps you easily save 3.8 times
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more money because everything is on
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autopilot and you don't have to think
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about it anymore it's the same strategy
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that I've been using for years and has
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allowed me to finally control my money
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instead of it controlling me if
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automating your finances sound
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interesting to you I'm graning a free
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challenge on July 1st while I'll show
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you step by step how to automate your
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money anyone can join but space is
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limited so secure your spot today I'll
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leave the link in the description and
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again it's completely free and you can
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win some great prizes next only two
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things in life are guaranteed death and
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taxes while everyone has to pay taxes I
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realize that more often than not the
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middle class are paying taxes without
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actively thinking about how they can
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legally reduce their taxes there are a
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ton of legal tax loopholes that
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middleclass people can take advantage of
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which is what the wealthy do in fact did
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you know that Warren Buffett one of the
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richest men in the world with a net
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worth of $134 billion actually pays less
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taxes than his secretary although it's a
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lot easier to reduce your taxes if
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you're self-employed it doesn't mean
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there aren't things you can do as
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someone with a full-time job one of the
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easiest ways is by contributing to a
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401k plan but you can only have access
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to one if your employer offers it but if
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you don't then don't worry because I'll
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share other ways to lower your taxes in
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a bit a 401k plan is basically an
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account that you can fill with pre-tax
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money which you can then use to invest
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in 2024 you can contribute up to $23,000
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to a 401k which means that you can
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reduce your taxable income by however
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much you contribute the three other tax
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advantage accounts to check out are
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first in HSA it's a savings account
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that's used to pay for current and
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future medical expenses like doctor
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visits or medicine you can contribute up
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to and reduce your taxable income by
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$4,150 in 2024 there's also a
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traditional IRA which is similar to the
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401K except you can open one up at any
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time time and you can contribute up to
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and reduce your taxable income by $7,000
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if you're under 50 and $8,000 if you're
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over 50 then there's a 457b plan for
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government employees nonprofit
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organizations and some for profit
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companies you can contribute up to and
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reduce your taxable income by
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$23,000 middle class habit number four
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so 2017 was probably one of the happiest
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moments of my life because I graduated
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college not because I completed a big
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milestone as a first generation college
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student which deserves claps all around
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thank you thank you but because that
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meant to me that I didn't have to study
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read a book or take any more exams for
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the rest of my life because I was
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terrible at them but it wasn't until
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maybe 7 months into my first job that I
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realized that this would severely impact
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my earning potential and this is when I
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realized middle class habit number four
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which is not understanding career
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Capital C newort came up with this
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concept called Career Capital which is
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basically the accumulation of your
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skills talents and abilities throughout
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your life which directly impacts how
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much money you can earn over time the
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more you know the more you can do and
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the more you can make in economics this
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can be explained by the law of supply
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and demand basically when you have high
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career capital or skills that are in
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high demand but there aren't a lot of
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people who can do it then you
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automatically position yourself to solve
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problems that few others can as a result
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employers are willing to pay a premium
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for you if you want to become rich you
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need to develop skills and talents that
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others want and if you have have what
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skills can you learn that will give you
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a leg up from your colleagues like when
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I worked in Corporate America I
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dedicated 2 hours every week to teach
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myself python a programming language so
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I could finish my work a lot faster a
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task that normally took someone 3 hours
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to do I can now do in 10 minutes and the
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whole reason for this was so I could
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aggressively push for pay raises and
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promotions and I don't know if you can
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tell but I'm Asian and in Asian culture
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you're kind of taught to be quiet keep
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your head down and just do the work so
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initially it was really hard for me to
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ask vate for myself for raises and
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promotions but because I had the skills
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that clearly made my work stand out for
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my colleagues I became a lot more
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confident in asking for more money
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middle class habit number five so my
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parents are immigrants meaning that
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growing up they always told me that I
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needed to work hard if I ever wanted to
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make it and out of my two other siblings
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they especially emphasized this to me
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because I consistently had the worst
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grades in school and I took what they
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said to heart I studied and I hustled
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really hard to show them that I could do
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it but after I graduated college and I
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started working in finance that's when I
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realized middle class habit number five
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which was yes hard work is important if
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you grew up poor it'll get you from
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point A to point B but to get to Point Z
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you need to work smart nval riec con
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said one of the biggest separators
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between those who make it and those who
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just keep on trying is leverage it's
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basically a concept that means
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amplifying what you do imagine you're
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throwing pebbles into a calm body of
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water each Pebble you throw represents
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your input you your effort into whatever
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you're doing and when the rock hits the
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water the ripple effect is the output
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Leverage is what can transform your
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Pebbles into Boulders and basically 10x
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the size of your ripples the reason
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Leverage is important is because we're
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all limited by 24 hours in a day if
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you're pizza chef and you can only make
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one pineapple pizza an hour no matter
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how hard you try to hustle you'll only
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be able to make 24 pineapple pizzas in a
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24-hour period it's a very linear
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process but for the wealthy their
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process is exponential they use leverage
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so they can make hundreds of pineapple
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pizzas in the same 24-hour period two
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types of smart work with Leverage is
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code leverage and media leverage which
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is creating software and creating
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content respectively both of these types
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of Leverage allow you to scale your
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output because all you need to do is
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write a piece of code once and the
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impact of it can compound over time with
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zero marginal cost to reproduce it again
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another example is before the internet
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if I wanted to teach people about
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personal finance I would need to find a
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classroom that maybe 30 40 people can
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fit inside of and I would need that
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classroom every single time a new group
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of people want to listen but now with
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content leverage all I need is a camera
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a computer recorded once and millions of
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people like you can watch and listen for
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as many times as you want but the
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easiest and quickest way that you can
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take advantage of Leverage is with
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investing on average the stock market
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returns about 10% a year meaning your
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money will essentially double every
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every 10 years without you needing to do
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anything if you invest $6,000 a year
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from 25 to 65 and an annual return of
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10% you'd end up with a total value of
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over $2.7 million on the other hand if
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you just kept the money under your
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mattress you'll end up with the same
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amount you tucked away
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$240,000 investing versus keeping your
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money under the mattress is the
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difference between using leverage and
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not and if you're looking to start
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investing I'll link the investing app
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that I use below where you can get free
00:10:59
stuff if you invest at least $100 the
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next middle- class habit is being okay
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with bad debt nowadays it seems like
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taking on bad debt is the cultural norm
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people are using bad debt to buy
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everyday things like clothes and
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groceries which reinforces the mentality
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that you can just use your credit card
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to buy whatever you like even if you
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can't afford it by the end of 2023
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Americans had over a trillion dollar in
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credit card debt which is the worst that
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it's ever been but don't get me wrong I
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love using credit cards because of all
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the benefits it has but my rule of thumb
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is unless I can afford to buy that thing
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outright in cash I will not buy it with
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bad debt credit card companies want you
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to spend more because that's how they
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make money if you can't afford to pay
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the bill at the end of the month they'll
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just charge you interest the problem is
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the average credit card interest rate
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nowadays is
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27.9% which can easily turn your $300
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Clothing Haul into thousands of dollars
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if you're not able to pay it off in time
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but if you already have bad debt the
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quickest way to get rid of it is with
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the AV launch method here's how it works
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first decide how much money you can
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budget off to pay off your debt every
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month it could be $50 $100 or even
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$11,000 second open up Google Sheets and
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list out all your balances and the
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minimum payments you need to make for
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each one third order each debt from
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highest to lowest by interest rates so
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if you currently have a $1,000 credit
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card balance with a 20% interest rate a
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$2,800 credit card balance with a 10%
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interest rate and a $177,000 car loan
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with an 8% interest rate what you want
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to do is make all minimum payments on
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all your balances to avoid penalties and
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if you have any money left over from
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what you budgeted put it towards the
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balance with the highest interest rate
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in this example you would put your
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leftover money towards the credit card
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balance with that $1,000 number once
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that debt is paid off you move on to the
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next balance with the next highest
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interest rates in the case the $2,800
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credit card balance then you just rinse
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and repeat which leads me is something
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that you've got to start accepting and
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it's that even if you're trying your
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hardest to be better with money
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sometimes you still might feel like
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you're not doing enough and that might
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be because you don't know the five
00:13:05
financial goals you need to achieve
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before you're 30 click here to find out
00:13:09
what they are and what you need to do
00:13:10
before it's too late
