Personal finance influencer Jaspreet Singh, founder of “Minority Mindset” on YouTube, has gained over 1.5 million subscribers for his work on financial literacy. He is a Canadian business owner who first started making money from his businesses at age 17. Singh has discovered the secret to earning and managing money and shares this knowledge with his followers to help increase their financial literacy.
Here are his five tips for improving your finances.
Avoid Financial Liabilities Like Credit Card Debt
Singh said that in order to maintain your financial health, it is essential to stay away from liabilities like credit card debt.
Liability is when you owe something to someone else. In this case, credit would be considered a liability. By owning a credit card, you owe money to the bank, and it will compound interest on what you owe.
“[The banks] want to keep you spending money on their credit card because now they’ll earn 18% to 25% in interest every time you spend a dollar,” Singh said in a podcast interview with Lewis Howes.
Don’t Finance Anything That Doesn’t Pay You Back
There are some assets worth financing — such as real estate — as they will pay you back over time. But if something doesn’t earn you your money back and you can’t afford to pay for it in full, this will just leave you in debt.
“Never finance anything that isn’t going to pay you,” Singh said on the podcast. “Gucci, vacations, car[s] — stop financing these things [that] aren’t paying you. Don’t buy a hundred thousand [dollar] car unless you have the money in the bank to buy it. Go buy a used car [in] good working condition with cash.”
Be smart with your purchases — for example, opting for an economy car purchased with cash rather than a six-figure luxury vehicle.
Improve Your Financial Literacy
Not understanding how money works will keep you from becoming wealthy.
“The banks profit when you’re financially uneducated because they’ll keep you saving money in the bank,” Singh said on the podcast.
This is because your cash loses value to inflation every day you keep it in the bank, whereas if you learn how to invest your money, it can continue to grow. When you financially educate yourself about where to put your money, you’ll make better financial decisions.
It is up to you as an individual to increase your financial literacy — in Singh’s case, he took it upon himself to read books about money. Familiarizing yourself with how to handle money issues will put you ahead of many people around the world.
Know Your Financial Worth
Throughout your career, you may encounter people who are making more money than you. This may be in your peer group or within your family. What is important is that you do not focus on what the people around you are making, and instead focus on what you could be making.
“[This is] what a limiting mindset is. You’re looking at what somebody else is making instead of what you could get,” Singh said in his interview with Howes.
Is the job you are working serving you best? Could you go somewhere else and make more? Is it time for a career change or time to ask for a raise?
Focus on yourself and the value you get out of your work. Recognize what you are worth, and go out and chase what you deserve.
Live Below Your Means
One of the keys to building wealth is to ensure you are not spending more than you are making.
“I talk about living below your means, which is important, especially when you’re in the early phases of trying to build your wealth,” Singh said on the podcast. “You need to be saving [and] investing your money.”
This is true whether you are making $40,000 or $400,000.
“Let’s say you’re putting aside 25% of your income. If you’re making $40,000 a year, that’s $10,000 put forward to savings and your investments,” he said. “What happens to most people is you want to get more aggressive and try to squeeze more pennies out of your pie. You try to go from saving 25% to 30% and 35%, but there’s a limited pie, right? What you should be doing is thinking, ‘I’m making $40,000 and putting aside 25%. Maybe I can do more.’ But the bigger thing is. ‘How do I go from $40,000 to $400,000 and keep doing what I’m doing?’ You’re still only living off 75%, and you have the same percentage, but it’s so much bigger. It’s that growth mindset.”
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