Personal Finance 101: Your Complete Guide to Building Wealth #Finance

Stepping into the world of personal Finance can feel like hanging out with people who have been friends forever and have all kinds of inside jokes and stories that

you know nothing about. And you’re just sitting there, nodding along, and trying to pretend like you aren’t completely lost. From the outside, the financial world can feel like a scary, confusing place. So, in this CashNews.co, I’m gonna explain some of the key topics and terms

you need to understand to be able to build wealth. Hey, I’m Britt, co-founder of Dow Janes and money coach, and I’ve helped thousands of women go from being personal none;">Finance newbies to building lives that they used to dream about. So if you wanna learn more about Finance and how to manage your money, be sure to

subscribe and so you don’t miss a thing. And now I want you to get a piece of paper, put on some comfy pants, and grab a cup of coffee, because this is going to be a crash course in everything you need to know to start building wealth, including how to pay off Debt, how much

you need in an emergency fund, and how to actually invest, so keep watching. Let’s start with how to build wealth, which we call our wealth-building roadmap. And I know you probably want to hear about investing terms and how to invest, and I’m going to get there, but this is really

important. You have to walk before you can run, and there are a few things that you need to do in the right order before you start investing, so I’m gonna cover those first. Just remember, planning your financial journey is a lot like planning any other journey, and the wealth-building

roadmap outlines the steps you need to take to build wealth and the order in which you should take them. So, there are five steps on the wealth-building roadmap. The first is spend less than you make every month. Second step is to pay off your high-interest rate Debt. Third step is

to build up an emergency fund, then save for retirement, then invest and grow your money. I’m going to cover a lot of these topics in this CashNews.co, but we do have a full CashNews.co on the wealth-building roadmap if you want to learn more. Bottom line, you need to know this. When it comes

to personal Finance, it matters that you do things in the right order, so remember this wealth-building roadmap when you’re wondering where to start or what to focus on

next. Now that you’ve got the scaffolding of the roadmap, let’s dive into some important Personal Finance 101 concepts, starting with everyone’s favorite:

Budgeting. So, how to set a budget. If you’re wondering where to start, where to begin, and you can’t figure out how much you spend on groceries and what to count for your health budget, you can start with this simplistic version, which is a 50/30/20 budget. It’s

the Budgeting method that we teach at Dow Janes. And it’s simple and beautiful in this way, because most budgets, they’re too complicated and too difficult to stick with. This one is clear, straightforward, and easy to set up. So if you need help spending less than you

make every month, this is the solution. Here’s how it works: you take your monthly Income after Taxes and you divide it into three buckets. 50% goes for your needs. These are non-negotiable expenses, things like rent, your health Insurance,

things that keep you healthy, safe, and able to work. 30% is for wants. Those are things that make life more fun, like a night out with friends or tickets to a movie. 20% goes straight into Savings. This is money that’s designed to take care of future you. If you’re

finding it difficult to save more than you make every month, you might want to start by auto-saving a percentage of your Income. Choose an amount that you can stick to, even if it’s, you know, only $50 a month at the beginning, ideally get that up to 20% of your

Income. But that by auto-saving, it allows you to only spend what you have left over. So now that you’ve got the basics of Budgeting, let’s talk about Debt. So there’s one term that’s really important when it comes to

Debt, which is your APR. So, the APR is your — stands for annual percentage rate. And it’s basically the interest that you’re paying on the Debt that you’re holding. And APRs very widely, so things like student Loans or

sometimes car Loans, mortgages, they’ll have a lower APR. They can be as low as 2 1/2%. And on the other hand, we have Credit card Debt with APRs as high as 25%. And that is — so, that’s the interest that you’re responsible

for paying because you’re borrowing money from someone else. Not all Debt is bad, but you just want to be really conscientious about the amount of Debt that you’re borrowing. This leads to things like your Credit score. It’s based

on the amount of Debt you’re borrowing versus the amount of Debt available to you. APRs are basically how you measure the cost of the Debt for you. So what you really wanna do is avoid any high-interest rate Debt, so anything

that’s on the Credit card end of the spectrum. We actually define high-interest rate Debt as any Debt with an APR over 7%. So, you know, there are some predatory car Loans out there with a 9% APR that we would consider

high-interest rate Debt. And the reason that you want to avoid high-interest rate Debt is because of how expensive it is. So when you’re paying 25% interest on your Credit card Debt, it’s, you know, it’s really

costing you. It something — if you buy a pair of jeans, it might actually cost you double in the end, depending on how long you’re taking to pay off that Debt. The other element of high-interest rate Debt is that it’s really important to pay that

off before you start investing. And that’s because the interest that you’re paying on your Debt is actually more than you’ll make by investing. So deal with high-interest rate Debt. It’s okay to hold onto low-interest rate

Debt and start investing, but to get invested, you want to pay off that high-interest rate Debt first. Next thing we’re going to talk about is your Credit score. So your Credit score is an indication of how reliable you are

at paying back money. Basically, it tells people who you’re going into business with how likely you are to pay your money back on time. And your Credit score matters when you are trying to do things, like rent an apartment, get a Loan, apply for a

Credit card, even look for a job. And there are a few different factors that are considered to give you your score. In the US, Credit scores range from 300 to 850, and you should aim to have a Credit score of at least 670. That allows you to be

able to get the Credit cards you want, get lower Interest Rates on things that you are — on Debt that you’re applying for. Next topic in Personal text-decoration: none;">Finance 101 is building an emergency fund. An emergency fund is money that you set aside for life’s unexpected expenses. So if your car breaks down or you get a flat tire or there’s a leak in your roof or you lose your job, that’s money that you have

set aside to deal with these problems. We don’t want you to be forced to go into Debt or to take money out of your Investments. So your emergency fund can range from six weeks to six months of expenses, and note: if you currently have Credit

card Debt, you only want to save $1,000 in your emergency fund for now. If you want to learn more about emergency funds, we have a whole CashNews.co where we cover topics like how big it should be, where you should keep it, what qualifies as an emergency, and other questions we get

about emergency funds. I’ll include a link in the description below. Personal Finance 101 continued: retirement accounts. So, we have a full CashNews.co on different types of retirement

accounts and how to find the right one for you, and it’s a lot, so I’m not gonna get into it too much here, but these — this is the basic types of retirement accounts you should know about. So, there are lots of different types you may have heard of. 401(k)s and 403(b)s, these are

employer-sponsored accounts. They’re accounts offered by the company or the nonProfit where you work at a relatively low cost. And sometimes they’ll even include what’s called employee matching, which means that whatever amount you contribute to your retirement

account, your employer puts in the same amount, up to a certain percentage. So, totally free money. You definitely want to take advantage if your employer offers 401(k) matching. The next type of retirement account is called an IRA. It stands for Individual Retirement Accounts, and these are

accounts that you open on your own, and anyone can open one. It comes with tax advantages so people can save and invest for the long term. One quick note on retirement accounts: just because you have a 401(k) or an IRA, it doesn’t mean you’re invested. You actually have to take the

money in those accounts and invest it in something for the money to grow. It’s a really common assumption I hear all the time is that if you have a 401(k), you think that that money is automatically growing, but it’s not. We also have a CashNews.co on what you should invest in depending

on how old you are, so make sure you go and watch that CashNews.co, because if you’re young, you wanna invest your 401(k) in higher growth, mostly stocks, versus if you’re closer to retirement, you want to be more balanced in that, but go watch the other CashNews.co. Last important

thing to know about Personal Finance 101 is about investing. So, of course we have a whole ‘nother CashNews.co on investing for beginners, which I’ll link to, but I’m just

gonna cover some high-level things that are important for you to know. So, when it comes to investing, in general, risk and reward tend to be closely related. So often the higher the risk, the higher the reward. The lower the risk, the lower the reward. And there are different ways to invest in

these different things. So, stocks are essentially small pieces of a public company, and Bonds are an IOU from a company or the government. You may have also heard of things like none;">ETFs, mutual funds, index funds…these are just baskets of different stocks and or Bonds all mixed together. So, some general rules for investing is one don’t panic. Historically the Stock Market always corrects itself. There’s a good

chance that your Investments will dip at point, but just sit tight. Don’t pull your money out. Two, diversify your Portfolio. If you’re only invested in one thing, then if something happens to that thing, you’re screwed. A diverse

Portfolio mitigates risk. That’s why things like ETFs, mutual funds, and index funds are great Investments because they automatically diversify for you. I

know that was a lot. We just covered literally every topic about this much in personal Finance, but on the bright side, you have a basic understanding of what you need to do

to start building wealth. Most importantly, I would say of this entire CashNews.co is the wealth-building roadmap. If you take anything away, just how important it is to do things in the right order. So first you want to be making more than you’re spending each month, then you want to pay off

your high-interest rate Debt. Then you want to save an emergency fund, then save for retirement, and then get invested. Now that you have a basic understanding of Personal none;">Finance 101, you are ready. You’re ready to start creating financial security for yourself to start building wealth. So if that is something you want, go watch our masterclass on how to think like an investor, and you will be on your way. I’ll link to it in the description

below. All right. Don’t forget to subscribe to our channel, , and give us a thumbs up if you learned something in this CashNews.co.