What EVERYONE Needs To Do With Their Money ASAP

What's up guys, it's Graham here. So I want to start this video off on a bit of a serious note because if economic growth begins to slow down, inflation persists, and stocks head for a bear market, it's more important than ever right now to make sure you're putting your money to its best use.

Even though we all want to believe that now is a great time to buy—everything is on sale, everything is getting cheaper—which is true, that won't be the case if prices keep falling, credit tightens up, interest rates increase, and then you have nothing left to buy the dip with.

So that's something that I really think needs to be addressed in this video, and why it's so important that you watch this all the way through. So with that said, here's exactly what you should be doing with your money right now, how to protect it against market fluctuations, and the best way that you could take advantage of the current market.

As soon as you subscribe and hit the like button for the YouTube algorithm, that's it! As soon as you do that, the video is going to start.

First, I would say the most crucial thing that you could do is report your Venmo transactions to the IRS. Just kidding! But seriously, I'll make a video commenting on this soon because the first thing that you should do is reduce your spending.

Now, this is something that I've been saying non-stop here in the channel for the last five years, regardless of what's going on with the stock market. But especially now, this is more important than ever! The more money you save today, the more money you're gonna have left over, and the more money you'll have to invest with during times when the market's down.

So if you're brand new and you want to know exactly what to do step by step, from start to finish, here's what I recommend:

First, immediately go and sign up for a budgeting software like mint.com or personalcapital.com. The second step, you're going to link your accounts, and then review all of your spending throughout the last 60 days, which I guarantee is going to be a lot more than what you would expect. Seriously! The majority of us are all going to have small unnecessary expenses that just constantly fall through the cracks.

So being able to look through your spending is going to allow you to identify those charges and put them in one of these two categories. The first part is going to be your mandatory expenses; this could be your housing payments, your health insurance payment, your food payment, and so on.

The next part two is going to be your discretionary spending. This is meant to be everything you want to have, but you don't necessarily need it. Like, do you need to spend $69 a month on OnlyFans? Do you need to spend a hundred dollars a week eating out at restaurants?

My recommendation is that you go through these last 60 days and itemize everything that you spent money on that you didn't absolutely need. And then you're going to do the unthinkable and add it up. Trust me, if you actually go and do this, I nearly guarantee you're going to wind up saving an extra few hundred dollars a month using this one trick that credit card companies hate!

But after that, part three: I want you to cut back on all the discretionary non-essential spending that you know you could live without. To me, it's going to be a little bit like going on a personal finance diet, except it's a diet that should get you in better shape financially. They're just like with any diets; the key to this is consistency.

So the best way to implement this is to immediately cancel all the subscriptions you don't actively watch, then monitor your budgeting software daily to see your spending in real-time. It's almost like logging your exercises at the gym, except instead of curling weights, you're beefing up your bank account.

And then part four: you're gonna add up the difference. Doing this is all about identifying what you don't absolutely need, cutting back on what doesn't matter and then having more money left over to invest with.

The last two months of your spending are going to reveal a lot about your unconscious spending habits, and the first phase of saving more money during a turbulent time is to be able to recognize those charges and then cut back.

But then after that, we could go on to the second phase of the video, which is: start saving. Once you get back on all of this unnecessary expenses, you're gonna have to do something with all that money you have left over. So here's where it's going:

The first most important use of that money is building up an emergency fund. This is basically going to become your insurance policy in the event you lose your income, you can't afford to keep up with your mandatory expenses, you don't want to sell your investments at a loss, and need something to fall back on. Ideally, your emergency fund should last you anywhere between three and six months, but if you're paranoid like me, you could go all the way up to nine months just in case.

Now, in terms of where to put your emergency fund, you want to put it somewhere safe that preferably pays you an interest rate at the exact same time, and that's what brings us to the high-yield savings account. Now, I have tried pretty much every single high-yield savings account in existence, and I have to say I've been thoroughly impressed with Ally Bank, who's currently paying a half a percent interest rate on your money. I know it's not much, but still, it's higher than Wells Fargo.

All right, so after that, third: the next thing that you should do is maintain or increase your income if at all possible right now. I really believe that you should go above and beyond with your work, maintain the best relationship you can with your boss and co-workers, and make yourself as indispensable as possible.

Again, these are all things that you should be doing at any time, but given the uncertainty in the market right now, it never hurts to be reminded that your main source of income should be prioritized. Now is also the time to take on additional work to give yourself a buffer in the event prices go down and you need additional money to buy the dip when Jerome Powell's money printer stops working.

Now, personally speaking, I do regret not having worked even harder and taken on more real estate clients from 2009 to 2013 just so I would have had more money left over to take advantage of low prices. Obviously, hindsight is 20/20, but going through that experience definitely gave me the perspective that money earned during times like this, when the market's down, could be very, very valuable.

And even though we don't know exactly when the market's going to recover, having more money available right now is never going to hurt. Also, I just want to mention that if you have any high-interest rate debt, like a credit card or a personal loan, now is the time to pay that off so you don't accrue any additional interest that makes your situation worse than it needs to be.

Here's my thinking: paying off a 20% interest rate credit card is essentially the same thing as you getting a 20% return on your money, and that's really, really good. Not to mention, even in the event that you pay off your card and then you need the money afterwards for something, you could always put that spending back on the credit card.

In the worst-case scenarios, cringe as that is for me to say, and if you don't end up ever needing it, well at least you paid off your credit card and you're saving a lot of money in the process.

And fourth, because the stock market is pretty much acting like it's had too much coffee and we don't know how long this panic is going to last, once you've made sure your job is secure, your emergency fund is in place, and you maximize the amount of money that you're able to make, now is the perfect time that you should begin consistently investing back into the markets.

Now, here's the thing: if the market keeps going down over these next few weeks or months, I know people are going to say, "But Graham, you were wrong! The market just kept going down. You should have shorted it instead!" And hey, you know what, there's a chance of that, and there's a chance that things just keep falling for a very long time.

But I also know from experience that if I say this and the market thing goes up, people are going to say, "Well, Graham called it! We shouldn't panic like he said. Things were so right. I'm glad I invested."

So all I'm getting at is that no one knows what the market's going to do. No one knows if the market's going to go up five percent tomorrow or down five percent tomorrow or both, apparently, which has been happening a lot lately.

All of us could just make an educated guess, but at the end of the day, it's just a guess. Some days you're going to lose money; some days you'll make money, but over time, things will return to normal and carry on as usual.

And that, of course, is going to be the point where you'll have been very happy you'd invested. So if you want to protect the value of your money long-term, I highly recommend you do this with your money over the next year. The first would be a Roth IRA that allows you to contribute $6,000 a year, and anything you earn within that account is completely tax-free by the age of 59 and a half.

The reason I like this so much is because, in a way, it almost doubles as your emergency fund in the sense that any money you contribute to that account could be taken out at any time without any penalty. So if you invest $6,000 in the account and then you realize that you need that money a few months later, you're able to take it back out.

However, the only downside is that once you take your money out of the account, there are very strict regulations about whether or not you could actually put the money back. So potentially consider this as a great way to double as your emergency fund and get to invest at the exact same time.

The second, you should also look into contributing to a 401k as well. This is another retirement account that lets you invest pre-tax money and then your tax on that money later after the age of 59 and a half. For example, if you invest $500 a month into a 401k, you're going to be taxed as though you're earning $500 less in your paycheck. That saves you money upfront and allows you more money left over to invest that you would otherwise have to pay to taxes.

Now, from my perspective, the 401k makes a lot of sense if your employer offers what's called a 401k match. This is when they match your contribution dollar for dollar up to a certain amount. Essentially, this means you're doubling your money immediately with no risk whatsoever.

The rule of thumb when it comes to doing this is that you should always do it, no matter what! In fact, don't even hesitate—just invest whatever you need to to max out the 401k match. Always!

And third, you can also look into investing in what's called an HSA, which stands for health savings account. This is probably one of the best known secrets out there, even though it's not really a secret; it's just nobody ever talks about it. Now, there are some guidelines you have to follow, and a quick Google search will tell you whether or not you qualify. But in the event that you do, you could invest another $3,500 completely tax-free using this account.

By doing this, you're not going to be taxed on the money you contribute to the account, so that's tax-free. You're also not going to get taxed on that money that you spend on health-related expenses, so that's also tax-free. It's pretty much like you're able to get a write-off, and then spend that money, and then not be taxed on the money that you spend on health-related expenses that we're all going to have at some point anyway.

So again, if you qualify, there's no reason that you should not be doing this with your money, especially now when the markets are down.

As far as what you could be investing in to protect your money within these accounts, here are my thoughts: one could be a small portion of cash. This is just the money that you're going to keep on the sidelines to be able to take up any good buying opportunity that you see.

I'm not going to tell you to go all cash or wait for the bottom because no one knows when that's going to be. But I do think that it could be a smart, conservative choice to keep a little bit of money on the sidelines just in case you see something.

The second: you also have the typical index funds, which is where I'm investing the majority of my money right now. Historically, an investment like this over the last 100 years has returned about seven to eight percent annually, adjusted for inflation, with dividends reinvested. I know that now seems low compared to the craziness that we've seen over these last two years, but come on, long term, the markets are not going to be increasing at 20 percent annually.

So it's best to ride the entire market as it goes up and not try to impress your friends over at Wall Street Bets. The third, like I mentioned before, some investors are hedging their position with cryptocurrency, and I think with a small portion of your portfolio, it could be worth looking into. In fact, Fidelity found that even just a five percent allocation to Bitcoin would have boosted the cumulative return of a traditional portfolio by 65% since 2014, even despite the sell-offs along the way.

Now, that does not mean go and YOLO everything to crypto, but it does mean that a three to five percent allocation could give you more diversification long-term in the event the prices begin to rebound.

The fourth: I know it's boring, but diversify! You should never be all in on one investment, one stock, one asset class, or one thing. If you do, you're setting yourself up for failure in the event that something happens.

I know it seems cool because it's an all-or-nothing approach that can make you several hundred thousand dollars with a single paycheck, but more times than not, you'll end up losing everything and wish you had stuck with the strategies that were almost guaranteed for success.

And fifth, I'm gonna say it again, but make sure you have an emergency fund on the sidelines in cash at all times. To me, it's more important than anything else in terms of preserving your capital and being able to weather through a downturn like what we're seeing.

Because here's the thing: it'll be a lot worse to sell your investments at a loss because you have to than it will be to keep an emergency fund on the sidelines in cash to draw from in the event that you have to.

That's why I believe the best way to protect your money is to stay employed, take on any additional work that you can, cut back on your expenses, and save the difference. So that way, you could ride through whatever happens and come out ahead—very profitable!

By subscribing and hitting the like button, if you have not done that already. But with that said, you guys, thank you so much for watching.

Also, make sure to add me on Instagram and on my second channel, The Graham Stephan Show. I post there every single day—not posting here, so if you want to see a brand new video from me every single day, make sure to add yourself to that.

And then lastly, if you want a completely free stock that's now worth all the way up to a thousand dollars, use the link down below in the description and sign up for Public using the code "Graham." You may as well do that; it's pretty much like free money. So let me know which stock you get.

Thank you so much for watching, and until next time!