AVOID THESE 5 MONEY MISTAKES IN 5 MINUTES

What's up, you guys? It's Random here. So let's be honest with ourselves. We all want to get better with our money, whether it's making more money or growing our wealth. It's all about the small improvements we make along the way. Unfortunately, most people will not follow these really simple five steps, and it shows.

Twenty-six percent of adults have nothing saved up. Thirty-six percent have yet to save for retirement. The average American has just over $5,700 in revolving credit card debt, and the median net worth for people aged 45 to 54 is only about $84,000. And yes, this took me forever to memorize all of this and shoot it all in one take, so make sure to smash that like button!

So basically, all I'm trying to say here is that you should pay attention to this. These are all really simple things that you could begin doing right now, that you can implement today, so you don't end up as one of these statistics I just mentioned.

Step number one is: don't spend everything that you make. Now, this might sound like common sense, but it was actually found in 2015 that the average millennial was spending 2% more per month than what they made. Don't do this. Because of this, it's so important to track your expenses and create a budget. For many people, the most effective way of doing this is just by paying themselves first.

So for every paycheck you get, you will automatically put aside a certain amount, and then you have the rest left over to do with as you please. This ensures that you save at least a consistent amount every single month by paying yourself first. Now, step number two is not to keep too much money in cash without investing it.

I rented this place, and I started bringing it here because this applies to a lot of people who just don't feel comfortable enough to invest, so they just decided to keep it cash instead. Now, the sad truth is that when you factor in inflation, your money actually ends up losing its buying power every single year that it's not invested.

When you consider that the average inflation rate runs about 2% per year, this means that for every hundred dollars you have saved, it'll be worth about $98 the next year. Now, of course, it's important to keep an emergency fund for anything that might come up and also not invest money that you might need in the short term. But anything beyond that, it's generally a good idea to invest it.

And I think it's also important that I mention that the S&P 500 index fund has historically performed nearly 10% returns per year, or closer to 7 to 8 percent per year when you factor in inflation. Compare this to a negative 2% loss from keeping your money in cash every year.

Step number three is: don't carry a credit card balance. This is the biggest waste of money ever! Sure, I'll just put it on my credit card. I'm never gonna pay it back anyway! When you consider that the average interest rate is 16.15%, and the average American has $5,700 of revolving credit card debt, that means that they're spending $920 per year just on credit card interest.

Now get this: instead of spending $920 per year on credit card interest, if you just invest that $920 per year every single year, let's say in an S&P 500 index fund, you're gonna be left with over $182,000 over the course of 30 years. So would you rather be paying that to a credit card company, or would you rather that money just be sitting in your bank account and then you can just go off and buy a Lambo?

Now, step number four is: don't ignore your credit score. That rhymes! Your credit score is something that's very easy not to pay any attention to, and for many people, they just don't care. But paying attention to this and building up your credit score could save you tens of thousands of dollars whenever you go and buy a house, a car, or maybe a business loan.

So here's an example of how that one piece of advice is worth over $18,000. Let's say your score is 680 instead of 740, and you go to apply for a mortgage of $250,000. You're going to end up paying about half a percent higher for having a 680 score than a 744. Over the course of 30 years, that means you're going to be paying $18,000 more in interest than if you had a 740 score.

That is really, really easy money to save just by paying attention to your credit score, paying off your debts on time, and keeping your debt ratio low. Now, the fifth and final piece of advice is not to invest in anything you don't fully understand. If you don't fully understand what you're investing in, and you don't fully understand the risks associated with that, it's really easy: don't invest in it until you know.

This is how many people make very reckless decisions when it comes to their money, by investing in something they don't fully understand and then panicking and getting emotional whenever it goes down because they don't fully understand the risks and the long-term outlook of what they're doing.

Even when investing in the stock market, even though it's historically performed about 10% per year, there might be years that it makes 20%, and there might be years where it's negative 15%. Understanding that this is part of the investing model, understanding that this is normal, and being okay with that, it's part of being a good investor and managing your money.

So with that said, you guys, thank you so much for watching! Please feel free to do me a favor. If you enjoyed this video, if you want to see more like it, or if you learned something from it, give the video a like. It really helps out a lot. Also, feel free to subscribe if you haven't already, and also feel free to comment down below.

I read every single comment; I do my best to respond to as many people as I can. So if you want to leave your thoughts down below, feel free to do that. Also, feel free to add me on Snapchat and Instagram. I post pretty much daily, so if you want to be a part of it there, feel free to add me there.

And then lastly, I know the intros are getting really long. I set up a private Facebook group for people who are interested in real estate. If you want to join that, the link is in the description. Thank you again for watching! Almost out of breath here. Until next time!