Green Flags Of Financially Educated Person

One of the biggest problems that plagues the happiness of this world is a lack of financial education. Too many people have little to no understanding of how money moves around the world, and you can tell when someone is financially educated by checking for these flags.

So here are 15 green flags of a financially educated person. We're going to start off at a pretty obvious point: they've got financial goals. The first green flag of a financially educated individual is having clear and well-defined financial goals. When you ask a random person what their financial goal is, the most common answer will be, "Well, I want to be rich," of course, which is, you know, understandable. But in reality, they have no idea what their financial goal actually is.

You see, someone who's financially educated will have a very clear number in their mind. It could be something like 100k a year by 30 or whatever turns their business profitable. They'll constantly adjust as they approach their goal, depending on where they want to be in life. Some start big and work their way down, while some start smaller and work their way up with building blocks. If you don't have a financial goal yet, well, it's a great place to start. Calculate everything that goes out of your pocket in a single year, and then double it. That should be your first financial goal.

So if it costs 40K a year for you to enjoy the lifestyle you currently have, well, your first financial goal should be about 80k a year. Now it's up to you to figure out how to get there, but at least now you've got a clear place that you want to get.

These people also have a great degree of financial patience. This is something you'll only see in financially educated people. They don't rush around any money decision just because they want the thing now; they wait for when the moment is right and when it makes sense. Sometimes it makes way more sense to wait, even if you do have the money right now. They don't sacrifice the opportunity cost because of impulsive impatience. They understand there's a place and a time for everything, and they have no problem looking for the right financial environment in order to make a decision.

This is something a financially uneducated person can't wrap their head around in their mind. If you really want something and you have the money for it, you should get it. But you see, just because you have the money for something doesn't mean you can actually afford it. Having money to pay the bill and affording to pay the bill are two different things. That's why you see people blasting a month's worth of their salary in a single weekend.

Living below their means is one of the most obvious green flags of a financially literate person. The ability to not overindulge for no reason at all is key. You see, financially educated people always have money to splurge and show off if they really wanted to, but they don't, because they know it's pointless and their money has better use in other places instead. After they achieve the life of comfort they desire or they seem sufficient, they put a cap on their lifestyle spending.

They understand that lifestyle inflation is a dangerous game that can hinder any kind of financial momentum. One of the biggest problems that lifestyle inflation brings is the inability to go back. If your life costs increasingly more every time you get a revenue bump—whether that's with a more expensive car with a higher insurance payment or a new place with a higher rent—you get the idea. You're essentially just increasing the height from which you'll fall if everything goes south. This is again an issue of what you can pay for versus what you can actually afford, and financially educated people stay well within the realm of what they can actually afford.

This also enables them to get something they really want without sacrificing their financial stability. Money is not a status symbol; they understand the difference between being broke and being poor. You see, being broke means you have no money; being poor means you have no way of making money. Financially educated people are well aware of the difference. For them, a lack of money at a particular point is not a problem because they know how to leverage their skills to earn more if needed.

So in turn, having or not having a certain amount of money available at a given point is not a status symbol. They don't look down at other people who have less, nor do they look up at those who have more. They just look at themselves and mind their own business.

Tracking expenses is another important green flag of a financially educated person. Their perseverance in tracking what money comes in and what money goes out is crucial. Most people have no idea what their life actually costs; they have a rough estimate and somehow they always find themselves with more months at the end of their money. If they were to put everything onto paper, they would 100% be surprised at where the money actually goes. You see, tracking expenses is a sign of maturity after all, and it gives you a better overview of your financial situation and allows you to make way better decisions. It's also one of the prerequisite steps into finding your first financial goal.

So do yourself a favor, okay, and create a Google sheet that you can track everything you spend in a month. We guarantee you'll have at least a couple of surprises.

The true cost of not having an emergency fund will hit you in the head like a brick when you least expect it, because look, that's how emergencies usually come up. You can tell a lot about someone by looking at how big their emergency fund is. Some people can repair their car; some can afford to not work for a year if tragedy strikes. A lack of an emergency fund is not only financially problematic, but it can be straight up dangerous. Sometimes life throws random curveballs at you, and you get your whole life ruined because you don't have a couple of grand saved. Fixable medical situations can turn into, "Well, I guess this is just my life now."

Real quick, so don't be stupid, okay? If you don't have an emergency fund available to you, make it a top priority. Start with three months of salary at the very least.

If the emergency fund stays in the back and hidden, waiting to come to your rescue if needed, your opportunity fund is like the life of the party. Here is one of the most powerful things a financially educated person can do: they can afford to miss opportunities. Think about it like this: when you've got a dedicated pool of money that's meant to be invested only in things that are interesting to you, you shield yourself from the fear of missing out.

You don't feel the urge to jump on every bandwagon that gets pushed in the media, and you don't care if you miss the train on something that didn't interest you in the first place. That's because your livelihood or financial future doesn't depend on that opportunity fund. You can call it your "play around" or your "fun money." It's money that you can afford to lose, and you've got zero emotional attachment to it. At the same time, when something interesting comes along, they'll always have disposable cash for it.

Financially educated people either have a great understanding of taxes themselves or they hire an accountant to do the work for them. You see, in pretty much every country on Earth, the taxing system is clunky as hell. It's not like someone from the government gives you an easy-to-understand pamphlet where everything is explained. No, no, you kind of gotta figure everything out yourself, and look, the reality is this: financially illiterate people pay way more taxes than they have to, and financially educated people pay way less than they should. That's just how the world works at the moment.

The point is there's a lot of benefits to understanding how taxes work and how you can position yourself accordingly. They know the real price they pay. Everything in life has two prices: the advertised price and the real price, and it takes a bit of understanding to know what you pay for and what you actually get in return.

So let's say, for example, the rent in the middle of a town is two thousand dollars. That's the advertised price. The real price needs to take into account what you gain from being in the middle of town. Are you closer to family, and do you get to see them more often? Are you saving up on both time and money by not having to commute? Can you do something that benefits you with that time and money that you gain?

You see, the more you run into this situation, the better idea you have of what you actually pay for and what you get in return. This allows financially educated people to make really smart decisions. You see, this isn't about money; it's more about economics, and economics is all about adding utility to your resources.

Speaking of, they use money as a resource. Financially educated people are not afraid to spend money instead of something else. Imagine it's 8 AM and it's pouring rain outside, and you got somewhere important to be. Since it's raining, the Uber price surges for like three times what a normal ride would cost. Do you take an Uber despite the way higher price, or do you spend 30 minutes looking for alternatives? You see, this is a situation where the price of an Uber is irrelevant.

That's just supply and demand happening in real time before your eyes. What's interesting, however, is how you position yourself. Is timing spent looking for another method of transportation worth the extra price you'd have to pay for the Uber ride? Because most people don't see it that way, and that's because they're used to sacrificing their time or jeopardizing their health rather than using money as a utility tool.

Hey, Luxers, this is the big takeaway from this video, and it'll change the way you look at money from now on. Financial education is not about money per se, but about the utility that you give to it. You see, two thousand dollars spent on designer sunglasses has a way lower utility than two thousand dollars spent on laser eye surgery.

At the end of the day, what separates a financially educated person from someone who's bad with money is their ability to increase the utility of their resources in every aspect. Let us know in the comments if you found this video valuable. A Luxer, we'll see you back here tomorrow for the Sunday motivational video.