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This video will tell you about finace.
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00:00I spent nine years in investment banking, understanding how the top 1% manage their
00:05money. I studied finance at university and trained as a professional accountant. And after all of
00:11that, I discovered you don't need to be rich. You don't need a finance degree and you definitely
00:16don't need to love numbers to manage your money like the wealthy do. You just need a simple
00:21roadmap and the commitment to follow it. So in this video, I'm pulling back the curtain on
00:26everything I learned in the last decade and the exact strategies the top 1% use to manage
00:32their finances. This is the only video you need to start building wealth regardless of
00:38your starting point. So here's what we're going to cover. First, we're going to get brutally
00:42honest about where you stand right now, your real net worth, your true income and your spending
00:47and whether you're actually building wealth or slowly bleeding money without realizing
00:52it. We'll also come up with a very clear plan to tackle any debt that you have. Next, we'll
00:56get really clear about your financial goals. This is all about the life that you want to
01:01build. No restrictions, no holding yourself back. We're going to get really clear and really
01:05specific. From there, we'll build an action plan around your goals. We'll cover a 12-month
01:10plan and also a month-by-month check-in to make sure you're on track. We will then talk
01:14about where you can keep your money so that it pushes you towards your life goals faster.
01:18Because let's be honest, if it's just sitting in a debt savings account right now, then you're
01:23moving further away from your goals instead of towards them. We'll then move on to investing
01:27because every year you delay is a year you lose freedom. I'll show you when to start, how to know
01:32you're ready, and why it matters more than you think. And then we'll move on to two of the biggest
01:37traps most people fall into. Car buying, which is the hidden wealth killer that wipes out savings.
01:43And I'll show you how to avoid getting ripped off. And finally, we'll put the endless rent
01:48versus by debate to bed. How to decide whether buying a house makes sense for you or whether
01:52renting will set you freer faster. And it's one thing to listen, but it's another to actually apply
01:58everything that I'm saying to your own finances. So as we go through, I'll share examples, mini quizzes,
02:04and practical tools to help you put everything into action. If you want to explore any of the templates
02:10or the guides that I mentioned, they're all part of my financial wellbeing toolkit, which gives you
02:15all the tools that you need to manage your money like the 1%. I've left the details in the video
02:20description if you want to check it out. By the end of this video, you can consider yourself
02:24financially literate and you'll have the exact roadmap to build a secure financial base.
02:30Okay, let's get into it. Starting with section one, understanding your financial now. This is
02:37incredibly, incredibly important. And the very first thing that you have to do, there's a quote that I
02:42love. If you do not know where you come from, then you don't know where you are. And if you don't know
02:46where you are, then you don't know where you're going. And this couldn't be more true when it comes
02:51to your finances. Yet most people ignore this step. Before you can make any real progress, you have to
02:56know exactly where you're standing today. This is about taking a clear, honest snapshot of your money,
03:01your income, your spending, your net worth, and most importantly, the gap between them. I'm going to put
03:07some numbers and a tracker on the screen. There are a lot of trackers and tools out there. Use whatever
03:11works for you. But the key here, absolutely key, is to keep it ridiculously simple. That's the only
03:17way you will actually stay on track with this and it won't feel like a chore. So there are three
03:22numbers that should live rent-free in your head. Your net income per year, your expenses per year,
03:28and your income surplus or deficit for the year. And you might be wondering, why are we doing this
03:34on a yearly basis? The reason is because doing it on a yearly basis gives you the truest picture of
03:39your finances. It captures everything from the one-off expenses, the surprise bills, and all those
03:45little things that would slip through the cracks if you only looked at this month on month. It's the
03:49most honest, accurate way to do this. Start with your net income. That's the money actually coming in
03:54after tax. It's what lands in your bank account. Include salary, any side hustles, dividends, freelancing
04:01work, rental income, interest. Add it all up across the year. So if you're on a salary, take your monthly
04:07payslip number and multiply it by 12. Then look at your yearly expenses. You can use an app or
04:12just scroll through your bank statements. Look at both the regular bills and the irregular spending
04:18you usually forget about. Now subtract that spending from your income. That number you get,
04:23that is everything. It essentially tells you whether you're moving forward or you're staying stuck. If
04:28it's negative, you're an income deficit, meaning you're spending more than you're earning. Over time,
04:33that will chip away at your savings. It will increase your debt and it'll pull you further
04:37from financial freedom. If it's positive, that's your income surplus. That's the money you have
04:41left over. And one thing to add, when it comes to savings and investments, although they're not
04:46technically expenses, treating them this way for this exercise and for this step helps you stay
04:51consistent with savings because it builds a good habit as you know what you're capable of. And then for
04:57the coming months, you can aim for more than that. That is essentially your baseline. We'll come on to this
05:02in more detail when we're looking at the future 12 months and the forecast. So here in this example,
05:08we have 4,851 as the income surplus. That's money left over. And the bigger that surplus, the bigger
05:16the gap between your income and your spending, the faster you can save, the faster you can invest, the
05:22faster you can buy back time, options, freedom, independence. We'll go into all of that in more detail in the
05:28coming sections. Now onto your net worth. Net worth, really simple. It's everything you own, i.e. your
05:34assets minus everything that you owe, i.e. your liabilities. Assets are things that you own that have
05:40value like savings, investments, property. List down all of the major purchases and the value of that
05:47asset. Liabilities, on the other hand, are debts and obligations that take money out of your pocket.
05:52So think mortgage, think car loans, credit card balances, personal loans. The difference is your
05:58net worth. And over time, you want your net worth number to increase and have an upward trend. You
06:04want to keep using your income to buy assets because whilst your income is important, income is the
06:10thing that buys you your lifestyle, but it's net worth that buys you your freedom. That's why this is
06:15super important. It doesn't matter where you're starting today. What matters is that from this point
06:20forward, your net worth is just moving in the right direction. Later in this video, when we talk about
06:25investing, when we talk about buying a home, buying a car, you'll see this pattern sharp again and again.
06:30Every financial decision you make either builds your assets or it builds your liabilities.
06:37Understanding the difference properly is one of the fastest ways to start building real wealth
06:42instead of just feeling busy with money. And it all starts right here by taking a really honest
06:48snapshot of where you are today. Now, one more thing I wanted to include here, which often gets
06:54ignored, is your money personality. The way you view life and view situations has a huge impact,
07:01whether you realize it or not, on how you save, what you spend on, how you invest, and even
07:05what feels safe or exciting when it comes to money. And the more you understand it, the easier it is to
07:13build a money strategy that fits around you and that actually lasts and doesn't feel hard to keep
07:20up with. There are loads of quizzes online and they'll give you an idea of what your personality
07:24traits are. Most of them also suggest action points on what to look out for and things to be cautious
07:29of to make sure you're taking the path of least resistance when it comes to managing your money.
07:34Here's the one that's included. It asks you 20 questions and based on the way you answer it,
07:38it'll bucket you into one of five money personalities. So at a high level, you have the
07:44contemporary. So this person loves living in the moment. They enjoy spending. They're generous with
07:49their money. Then you have the enterpriser, highly goal-oriented, calculated with your spending and
07:55always planning ahead. You have the minimalist, which values simplicity and security. They're cautious
08:00with money and very laser focused on building a really strong and stable future. You have the realist,
08:06which is practical and they are practical to the core. They prefer safe, steady financial choices
08:11that keep them really grounded and protected. And then you have the socialite. They love the finer
08:16things. They love making memories with others and for them money is best spent on things like
08:20experiences, celebrations, and pretty much just living life to the fullest. Let me know which one you
08:25think you are closest to. It turns out that I'm the enterpriser, which honestly, it made a lot of
08:30sense. The quick follow-up advice it gave me based on my result, and these might get you thinking
08:34about your own habits too. It was firstly, look ahead with your numbers to make sure you're actually
08:39on track for the lifestyle that you want. And this is something that I'm actually going to walk you
08:44through how to do in one of the upcoming sections. It also said, unpack the details behind all of the
08:49financial products. And you may be used to doing it all on your own, but bouncing ideas off an expert
08:54can't hurt either, which is pretty accurate, I'd say. This specific one is part of my financial
08:59wellbeing toolkit. You could also find plenty of other ones online as well. Okay, moving on to
09:04section two, having a plan for your debt. This is super important. And if you have any debt,
09:11then a bit of structure and a bit of strategy can make all the difference. And that's exactly
09:15what we're going to put into place now. So the first thing to get your head around is that not
09:20all debt is bad. Some kind of debt can actually build your future if you manage them well. Think about
09:25a student loan that lifts your earning potential or a loan that helps you own an asset likely to
09:30appreciate over time. These kind of debts, they can work in your favor and can make you more money.
09:36And then other debts work in the opposite way. They cost you money. So I'm talking about things
09:40like credit card debt, payday loans, short-term finance deals. They all seem harmless at first,
09:46but the costs really stack up behind the scenes. So knowing the difference helps you prioritize.
09:51If you've got multiple debts, you need to know what's helping you and what's hurting you. So step
09:56one, get all the information in one place, use a spreadsheet, use a notebook, an app. It doesn't
10:01matter what you use as long as you're using something to track it. And for every debt that
10:05you have, jot down the total amount you owe, the interest rate, the minimum payment, the due date,
10:12and whether there's any flexibility on that credit card or on that loan, like 0% offers or
10:18payment holidays. Once everything's laid out in front of you, you can actually see it.
10:22You can actually understand it. You can work with it. So now it's time to choose a repayment
10:27strategy. Two main ones. First is the debt avalanche. So for the avalanche method, what
10:32you're doing is you're taking your debts and you're ranking them from highest to lowest in terms of
10:37interest rate. So if I click here, you can see how the order of the debts are reshuffled. It's ranking
10:43it from highest to lowest based on interest rates. So what you do is you put as much money as you can
10:47towards the top one that is charging the most whilst you're paying the minimum on the others.
10:52And then you work your way down. The avalanche method is the most mathematically efficient way
10:56out and it will save you the most amount of money. The second option you have is a debt snowball.
11:01So for this, you take your loans and you pay it off in terms of smallest to largest in terms of
11:07loan size. So if I click this, you'll see how the order has reshuffled. So this is how it goes in
11:13practice. You start by paying off your smallest debt first, ignoring the interest rate,
11:17and you get a quick win by paying that smaller amount of quicker than you would a larger amount.
11:21Then you roll your payments over to the next one and the next one. And that's the order it works.
11:26It's a more emotional approach, but it works because it's building confidence by seeing you
11:30knock off the loans one by one in order of debt size. And if you're sitting there thinking,
11:35which one should I pick? Honestly, the one that helps you stick with that. Snowball,
11:38if you need motivation. Avalanche, if you want to save money. I personally am all about the
11:43mathematically efficient one, especially with high interest rate debt. But if it means you
11:47end up not taking action, I'd rather you go for the debt snowball. Both are better than doing
11:52nothing. And one more practical tip whilst we're here. If you have credit card debt, look into a
11:56balance transfer card. This lets you move your existing debt to a new card with 0% interest for
12:01a very limited period. It doesn't erase your debt, but it just gives you more breathing room
12:06and you can stop interest from piling up whilst you're paying it off. Be mindful of any transfer
12:12fees. Just make sure you've got a really clear plan to clear it before the 0% period ends.
12:17And finally, to wrap up this section, I wanted to mention debit and credit cards because how you
12:21use them really shapes your financial habits over time. So a debit card spends your own money.
12:26It pulls cash straight from your account. And once that money's gone, it's gone. A credit card
12:31spends the bank's money. They're essentially lending you money. And if you don't pay it back on time,
12:37they're going to charge you for that privilege. If you use this wisely, the credit card, you pay it
12:42back on time in full at the end of every single month or your payment period. Credit cards can be
12:46a really smart tool because they offer points, they offer cash back, they offer travel rewards,
12:52basically free stuff for spending money you were going to spend anyway. So if you're buying your
12:57weekly groceries or your train ticket or your recurring phone bill, and you already have the
13:02money, then using a credit card and then paying off immediately is a really good move. But, and this
13:07is key, if you can't afford to pay for something outright in cash, you probably shouldn't be buying
13:13it with debt either. There are very few exceptions in my view, and they are the big pillars. Property,
13:20healthcare, education, and anything else that is going to make you more money. Everything else,
13:24save first, spend later. Okay, so if you've gone through these sections, you now have a incredibly
13:30crystal clear view of where you stand. And now you can look ahead with confidence and a clear
13:37direction. Okay, so moving on to the bit that puts everything else into place. It's section three,
13:42setting your financial goals. This is unbelievably important because if you don't know what you're
13:49aiming for or what you're working towards, it's almost impossible to make the right decisions with your
13:54money. That's the first thing. And second thing, where you put your money, whether it's in savings
13:59or in investments, it depends entirely on when you need it. So before we dive into savings accounts,
14:05investment platforms, stocks, bonds, I want you to hit pause for a moment and take five minutes,
14:11grab a pen and paper, your phone, a spreadsheet, whatever you like, and write down your goals. Every
14:17single goal that you have for yourself, write it down. Even the ones that feel impossible,
14:22the ones that other people are telling you are unrealistic, ones that you might be doubting if
14:27you could achieve them, write it all down and don't let anything deter you at the moment. Pause
14:32this video if you want to pause it whilst you do it right now. And then next to each goal,
14:37jot down a rough idea of when you want to achieve it, a timeframe. This might sound like a small step,
14:43but it's everything because the when of your goal changes the how of how you should manage your money.
14:49And this timeline matters so much because the longer the timeframe, the more powerful your
14:55money becomes. So let's say one of your goals is 20 years away. Maybe it's retirement, maybe it's
15:01funding your kids' university years down the line. For long-term goals like that, you've got one of the
15:07most powerful forces on your side, and that is time. And this is backed by a century of financial
15:13history. Over the last 100 years, anyone who invested their money into the S&P 500 and held
15:20their investments for a minimum of 20 years never lost money. Not once. In every 20-year stretch,
15:27the market delivered a positive return. And even in the weakest period, the return was still over 4%,
15:34except for one unusual case where if someone sold their investment in 1948 and bought in 1928,
15:41they would have returned 2.86% rather than the minimum 4% they would have got in any of the
15:47other 20-year periods. 79% of the time, the returns were 8% or higher, and 59% of the time,
15:54they were 10% or higher. Why am I saying this? Let's translate those numbers into real life.
16:00So if you had invested $100,000 and left it alone for 20 years, a 4.4% return would have turned that $100,000
16:08into $219,000. An 8% return would have turned it into $460,000. And a 10% return would have turned
16:17that $100,000, your $100,000 into $670,000. That's nearly 7x your savings. It's about making your money
16:27work hard for you and letting the market do what it's historically done to get you to your goals
16:33faster. And say, okay, if you don't have 20 years to save that money and invest it, what if the goal
16:40that you have is 10 years away, like moving into a bigger place or starting your own business? The
16:45data still holds solid. Most 10-year periods in the market delivered really strong positive returns and
16:52in most cases, double digits. There were a few exceptions. If you, for instance, invested in
16:571998 and sold in 2008, so you held it for that 10-year period, you sold just after the 2008 financial
17:04crisis, that would have been a small loss, around 1.4%. But those kind of cases, they're outliers.
17:10They're not the norm. Now compare that to a one-year hoarding period. Say you'd invested for any one year,
17:16this shows a completely different story. If you're in the market for any one year, you can see the
17:21returns are unpredictable and you really don't know what it will be in any given year. You can make a lot,
17:26you can lose a lot. You just don't know. So if you've got a short-term goal, something happening
17:32in the next year or two years, the market probably isn't the right place for that money. And then that
17:38circles us back, right, to why setting a clear timeline matters. Because once you know when you
17:43want something to happen, you can pick the right strategy for that goal. So short-term goals, anything
17:49that's happening in the next five years. So this is your emergency fund. This is that holiday that you've
17:54been dreaming about coming up. This is Christmas presents, maybe a house deposit that you want to
17:58pull together soon. This is all short-term money and it needs to be in a place that's very safe
18:03and accessible, not at the mercy of stock market swings. Then you have medium-term goals. And this
18:09is for anything that you're planning or any goals that you've written down that are between five to
18:1315 years away. So maybe a bigger home, school fees, starting your own business, that maybe one day
18:19dream that you actually want to turn into a plan. This is where you want your money working a little
18:24bit harder and your chances of riding out the ups and downs of the market improve massively. Your
18:30chances of beating inflation, protecting your money's future value, they get a lot stronger during
18:36this timeline. So for goals during this period, you want to start looking into investment accounts
18:41that match your country's tax rules and your personal comfort with risk. And we'll go into that in one of
18:46the sections coming up as well. And then there's long-term goals. So this is anything 15 years and
18:51beyond. This is retirement. This is building wealth for your future. This is giving your money the time
18:56and space to grow in a serious way. When you're planning this far out, you just have to be investing
19:04your money. You're leaving a lot of money on the table if you're not. So for now, for this section,
19:10all I want you to do is have your goals written out, all the goals that you want to achieve,
19:13the timeframe, how many years to get there, and just right next to it, whether it's a short-term,
19:18medium, or long-term goal based on the outline I just gave you. Okay, so now we're moving on to one
19:24of my favorite sections because we're turning everything that we had planned into reality now.
19:30And this is where it all starts to feel real. Up to now, or up until now, we figured out where you
19:35stand and what you want. Now we turn that into a practical plan, one that actually helps you build the
19:41life you're aiming for. Welcome to budgeting. I know the word budgeting alone can sound tedious.
19:47It sounds restrictive, but when you really understand why you're doing it, budgeting can
19:53actually be one of the most freeing things you can do with your money. And the best way to explain this
19:58and to convince you of this is to use a car analogy. So you just outlined your goals. Think of all those
20:04goals that you'd outlined as different destinations. These are the places that you want to reach.
20:09Now we're going to prepare a 12-month forecast looking forward. And essentially, that's the
20:15road that you're on that will get you to those goals that forces you to look beyond the next week
20:21or the next month. When you can see your whole year ahead, the next 12 months, you start to notice
20:27patterns and opportunities that you'd otherwise miss. You spot the bumps in the road before you hit them,
20:33like your annual insurance renewal, like holiday spending, or that wedding you've got coming up in
20:38August that is abroad. What we'll also have is monthly check-ins. Those are like the dashboard
20:43inside your car telling you how fast you're going, whether you've got enough fuel, if you're drifting
20:48off course. Without a map, a road, and a dashboard, you're just driving aimlessly. You're hoping you'll
20:54end up somewhere good. And we've all seen how that works with money that usually doesn't. So how do we go
20:59about this? The first is creating your baseline. Essentially, this is your what happens if I keep
21:04going like this plan. You take what you know from the last 12 months, your income, your spending,
21:09your habits, and you project it forward into the next 12 months. Once you know what your year looks
21:14like, you can then start doing something about it. So now we're going to split the savings and
21:19investments off separately. We're doing the savings and investments first. This way, you can tweak the
21:24forecast until all of your surplus that you may have had before is allocated ahead of time. It isn't
21:29something that just happens as an afterthought. And once you've done that, you ask yourself the
21:33strategic questions. This is where you ask your questions like, can I shift more money into
21:38savings or debt repayments? Can I cut back spending on areas that I know are coming up so that I can
21:45save more? Which spending categories specifically for the things I know I'll have to pay, can I reduce?
21:51You want to, in this exercise, focus mostly on the things that you know you have to pay, your needs
21:57essentially, your essential living costs, because everything else will fluctuate massively month on month.
22:03These are the expenses that you know you can reduce and will have a really big impact over the course
22:08of 12 months. And I want to go into more detail for a second about some easy wins that can make a huge
22:13difference. So one of them, utilities, cell phone, home internet, everyone has to pay them. You
22:19definitely need these things. But what you can do is just compare the same packages with other
22:24providers and use that to negotiate your package to make sure you are getting the absolute best deal on
22:29the market. If you call them up and ask, they are very likely going to do something for you because
22:34they'd rather keep you as a customer than have you leave for a competitor. Another category, easy win,
22:41groceries. You can decrease your spending by looking at different stores around you, seeing if you can buy
22:46things at different places, buying staples when there are discounts, swapping your Waitrose shop for an
22:53Audi or a little shop. It may not seem like a huge difference, but if it's something you use regularly,
22:58it will stack up over time. The good thing about making these adjustments now, after you've done
23:03your forecast, is that they're very targeted because now you've got a reason. You know exactly what needs
23:07to shift. And then when we move on to one of the next parts, which is how much you need to invest,
23:12then you could come back here again and keep tweaking this until you're happy with balancing the short
23:17term, i.e. the next 12 months spending with your long-term goals. Okay, so once you've mapped out
23:23your yearly forecast, the next step is moving on to monthly check-ins. It's through these monthly
23:28check-ins where you spot little changes, a higher electricity bill, a subscription that you forgot
23:33about, a little overspend on dinners out, and then you catch them and course correct whilst it's still
23:39easy to fix. So what I'm going to share now on the screen is a very simple budgeting framework that I
23:44use. You can use whatever makes sense for you, but what's really important is just keeping this
23:49super simple. So I love the 50-30-20 rule because it helps you visualize your spending by categorizing
23:56your income or your take-home pay into three buckets. Essentially what the 50-30-20 rule is,
24:01is that 50% of your take-home pay should be going towards your fundamental needs. So things like
24:06groceries, rents, transportation, everything that you need for your basic living. 30% into your fund
24:13spending, things that are nice to have but not necessary, like going out to eat, going to the movies,
24:18any social plans, and then finally 20% should go towards the future you. So this is savings,
24:25investments, and extra debt repayments. That 50-30-20% allocation is not a hard and fast rule,
24:32it's just a benchmark. You can tweak it completely to match your lifestyle, but I want to show you
24:36how it works with the monthly check-in. Let's say in this instance you put all your numbers into a
24:41spreadsheet and you find that your fundamentals add up to 59% of your take-home pay, but your target was
24:4650%, your fund spending is 30%, and your future you is at 11%, but your target was 20%. Now you know
24:55compared to your target goals that you have that there are some adjustments that you need to make
25:00to stay closer to your goals. Maybe this is the first month tracking and you'll need to tweak the
25:06percentages to make them more sustainable for you, or maybe you'll find areas where you can tighten
25:10your discretionary spending. When it comes to monthly check-ins, the three questions I recommend
25:15asking yourself when you're doing these monthly budgets is going through your fun and your
25:20fundamental needs categories and through every line item asking yourself, do I need this? If I do need
25:27it, can I live with less of it? And can I get the same thing for less? When you combine your 12-month
25:33forecast with your regular monthly check-ins, you're creating a very practical roadmap that guides you
25:39constantly towards your financial goals. By the way, if you are someone who does not have the time
25:44or the energy to build the spreadsheets or the systems from scratch, then you can use the ones
25:49that I have. They are ready to use and they all come up with the Financial Wellbeing Toolkit. This
25:54is an online toolkit designed to give you everything you need from the step-by-step guides, the calculators,
26:02the tools, the spreadsheets to take your finances from chaos to complete 100% crystal clarity. What you've
26:10seen or the glimpses that you've seen so far is about 5% of what is included in the toolkit. Inside,
26:17there's a full roadmap that takes you through goal setting, through saving plans, through debt
26:22strategies, through investing foundations, everything step-by-step. And it's designed to give you total
26:28clarity without all the overwhelm. This is the kind of thing that I would have killed to have when I was
26:33figuring out my finances. It's super frustrating that to create a financial plan for yourself or
26:40from a financial advisor, it's really expensive. So I wanted to build something that takes you through
26:46the process where you can create your own financial plan, understand your own finances at literally a
26:52fraction of the investment of what it usually would cost. So I hope you love it. If you want to check it
26:56out, there is a link in the description or you can head to nisha.me forward slash plan and you will see an
27:02early bird access code on the website at the moment. The first 500 people will be able to use
27:07that code and get a huge chunk off of their toolkit. Moving on to the next section, where to save your
27:13money. Now let's talk about banks because when it comes to saving your money, most people look at it
27:20in the wrong way. When you keep your money in a bank account, they're not just storing it safely for
27:24you in some vault in the basement with your name on it. They're using it. They take out that money and
27:30they lend it out. They lend it out to someone buying a house. They lend it out to someone starting a
27:34business, someone financing a car, and they charge a lot more in interest than what they're paying you
27:41to leave it sitting there. The difference, the gap between what they charge borrowers and what they
27:46pay savers is called the net interest margin. Just fancy term for something very simple, which is
27:52just their profit. So when you're earning 1% on your savings and then that money is being lent out to
27:57someone who's paying 6% on a loan, that 5% margin is essentially in the bank's payday. And if you're
28:02not shopping around essentially for the best rates, if you're just leaving your money wherever it happens
28:08to land, then you're basically handing them that extra margin for free. You want to keep as much of
28:12that as you can. The first thing to do is compare rates. Use independent comparison sites, real ones,
28:19not just whatever your current bank's marketing page is telling you. And when you're comparing,
28:23think about what you actually need. If you want access to your money at any time, look at easy
28:30access, saving accounts. If you're happy to lock away your money for a little while, look at notice
28:35accounts where you agree to give, say, 60 or 90 days notice before you take it out in exchange for a
28:43slightly better rate. If you're in the US, you might look at certificates of deposit, CDs, which also
28:49tends to offer better rates as well. But remember that money is usually locked in for a fixed period.
28:54So while it may not be right for your emergency fund, it could be ideal if you've got a future
28:59expense coming up in the next year or two, like a tax bill as well coming up in the next couple of
29:05months. My number one tip here, don't just look at traditional banks. Online banks and investment
29:09platforms as well, they're increasingly offering competitive cash accounts. I know that sounds a bit
29:15odd using an investment platform to save your money, but especially in Europe where traditional
29:19bank rates are painfully low, these newer platforms can offer much more attractive returns on your
29:25savings. So we're talking three to 4% interest compared to the 1% you might get from a high street
29:30bank. There are fewer overheads for these online banks so they can pass on more of their margin to
29:36you as a customer. So that is the savings, what to look out for, where to keep your savings. At what
29:42point do you stop saving and start investing? Section six, when to invest. But when should I
29:48actually start investing? This is the million dollar question, sometimes quite literally. And I'm going
29:54to give you a clear roadmap that balances protection and growth. So step one, first up, save up to one
30:02month's worth of your living expenses. Before anything else, save one month. Think of this as your
30:08financial breathing room. Just enough to help you sleep at night while you tackle the next steps.
30:15This isn't your fully funded emergency fund yet, but it's just your first line of defense.
30:20Then move on to step two, and that is paying off the high interest rate debt. Target any debt with
30:25interest rates above 8%. That's what I mean by high interest rate debt. Why 8%? Because mathematically,
30:32it's very difficult for your investments to consistently outperform this rate after also
30:38taking into account inflation. That 20% credit card debt, it's literally draining your wealth faster
30:45than you can build it. Those high interest personal loans, same thing. So paying these off is essentially
30:51giving yourself a guaranteed return equal to the interest rate. That's a deal that you won't find in
30:59any investment market. And then step three, build and invest simultaneously. Here's where things can
31:06start happening at multiple fronts. So once you've got that first month's worth of your living expenses
31:10saved and you've got your high interest rate debt handled, you could then start moving on to multiple
31:16fronts. Continue building your emergency fund towards your target, and that's usually three to six months
31:21worth of your living expenses. And you can start investing for your long-term goals at the same time.
31:27This approach is so much more motivating than just finishing one thing completely before starting
31:33another method, because you get to see your progress in different areas of your financial
31:38life simultaneously. So maybe 70% of your surplus goes towards finishing your emergency fund,
31:43while 30% goes towards working for your investments. The exact split depends on your comfort level and
31:49timeline, but you want to, as much as possible, keep trying to move forward. And that's why I recommend
31:53doing them simultaneously after getting to a point you're comfortable with. Now moving on to the next
31:58part where we put the money we have in our life towards our life goals. And this is section seven.
32:03So let's get real about those big dreams you're saving for. Whether it's buying a home, sending your
32:09kids to college, or sipping margaritas on the beach during early retirement. How much realistically should
32:16you actually be putting aside to reach those goals? The trick here is to work backwards. Ask yourself three
32:23simple questions. First, what's my goal? We've already gone through this. So whether that's a new home,
32:28world travel, financial freedom, what is that goal? Secondly, how much will it cost? Put a number
32:33next to it. And third, when do you need it by? Five years, 10 years, 20 or 30 years? If you're not sure
32:40about that second question, how much that dream or that goal will cost, use an online calculator or even
32:45an AI assistant, chat GPT, to calculate a ballpark figure for you, that's good enough to get started with.
32:53Now, let's break this down with a real example. So imagine you want to buy a home in 10 years, and you need
32:5950,000 for the down payment. How do we figure out therefore what to invest to get you there? Let's play around
33:05with some numbers. If you invest 300 monthly for 10 years at a conservative 7% return, you'll contribute
33:1336,000 of your own money over time. But the amount you have available, i.e. your investment pot at the
33:19end of it, will grow to approximately 50,000. You don't need a lump sum investment today at all to reach
33:25that goal. But what if your budget only allows for 200 a month? Then, as you can see here, you need to
33:32invest about 7,500 upfront to still reach that 50,000 goal because you're investing less on a
33:37monthly basis. So you need to put in more upfront if you have that money. And what about if you could
33:42only budget for 100 a month? Then, as you can see, you need an even larger initial investment to stay
33:48on track to start with. What I'm doing here is just playing out scenarios on how much I need to invest
33:54lump sum or monthly based on the rate of return I'm expecting, the goal amount, and the number of years
34:00I have to reach that goal amount. And then the beauty here is flexibility. So let's say your big
34:06goal is you want to reach 1 million with the same 7% return. The calculator says you need to invest
34:12500 monthly. But wait, your budget from section one that you've done shows you only have 300 a month
34:19available to invest. That difference between what your 500 that you need to invest and the 300 that
34:25you actually have available, that's your investment gap. Ideal investment amount, 500 a month. That's what
34:30you need to hit your goal. Your realistic investment amount, the 300 a month, which is what you can
34:35actually afford right now. And then your investment gap, which is the difference, that's 200 a month.
34:40That is very normal. There's investment gap in most cases and recognizing it shouldn't be discouraging.
34:46It's actually a huge step forward because now instead of just saving aimlessly in the hope that
34:50you'll get there, you now have concrete numbers to work with and so many ways to actually bridge that
34:55gap. You can now think about potentially extending that timeline. So could you reach your goal
35:00in 32 or 35 years instead of 30? You could also think about optimizing your returns. So could you
35:05consider investments with slightly higher potential returns whilst keeping your risk appropriate? And
35:10we're going to talk about that in the next section. What about start with a higher initial lump sum if
35:15you have that available? Or maybe it's just something or a situation where you're gradually going to
35:19increase your contributions over time as your income grows. So you're going to direct more towards
35:24closing this gap over the years. Potentially, you might even be looking at ways to increase your
35:28salary. What matters most is that you've transformed a very vague financial goal that maybe you just
35:35thought of today and you put numbers into it. And now you can track your progress towards that goal
35:40and you can adjust and you can eventually achieve that goal. What you'll also need to do is remember
35:44to look up the tax rules for the country that you live in and start matching your investments with
35:50those rules. I have a video right here. It's another topic in itself about how to pay less tax,
35:56which you can check out as well after this video. These can significantly boost your progress
36:00towards closing that gap because the less you pay away, the more you get to keep. The bottom line
36:06here is when you know your numbers, your dreams then can become plans. And plans have a funny way of
36:13becoming reality. Now let's move on to the different investment strategies you can explore to optimize that
36:19rate of return for you and your personality. And here's the thing, main thing that I want you to take away.
36:26investing the same throughout your entire life. Your priorities will change, your risks will change
36:31and your investment strategy should change with them. For instance, when you're in your 20s or 30s
36:36and you're decades away from retirement, time is your greatest asset. You can afford therefore to
36:41take more risk because even if the market drops, you have years to recover before you need that money.
36:47But as you get older and you get closer to retirement, which is when you're going to need that money,
36:51especially if you're saving predominantly to retire on it, the focus starts to shift. You're not just
36:57trying to grow your money anymore, you're trying to protect it. And that's where wealth preservation
37:01becomes more important than wealth accumulation, i.e. wealth growth. So how do you decide what of your
37:09portfolio should be preservation and what part should be growth? So here's a very basic way to look at it.
37:16Take your age and round it up to the nearest 5. So it will end in something with a 5 or something that
37:23ends in a 0. Now you're going to take that number and you're going to subtract 10 from it. That is the
37:28percentage of your portfolio that should be bonds and everything else should be in equities. So say
37:34I'm 32, that rounds up to 35. 35 minus 10 is 25. So 20% of my portfolio should be in bonds and the
37:43remaining 75% should be in equities. If I'm 58, that rounds up to 60. 60 minus 10, half of my portfolio
37:50should be in bonds and the other half should be in stocks, equities. Then as you age, you gradually shift
37:56more of your portfolio towards the preservation to protect the wealth that you've then grown and
38:01accumulated over your working years. So that's one way to look at it. It's not perfect, but it's a
38:06very helpful baseline. Personally, I wouldn't stop there. Your comfort with risk and your ability to
38:11essentially sleep at night when markets get volatile matters just as much. Some people who are in their
38:1630s get anxious with a 20% market drop, while some people in their 50s handle it completely fine and
38:21with ease. So this is why understanding your own risk tolerance is also really important for building a
38:26strategy that you'll actually stick to and not feel like you need to sell when things get
38:31bumpy. Additionally, on this note, one of the biggest dangers I see is concentration risks,
38:35which is essentially when someone's portfolio gets so heavy on one thing without them realizing.
38:40And a big risk here is actually company stock options. So if your company has given you stock,
38:45has given you stock as part of your compensation, do ask yourself, is this becoming too large of a
38:50percentage of my overall portfolio? And do I truly believe in the company's long-term prospects?
38:56Because sometimes if it's too heavily based on that, you might want to de-risk, i.e. sell a little
39:01bit of that, and then transfer that money into other investments that make more sense for you.
39:05But again, this is all about understanding your own risk and your own appetite. Personal finance,
39:11it's personal. There is no one-size-fits-all answers, but you do want to understand what your
39:16risks are, how close you are to retirement, and your risk appetite. And ultimately, that will determine
39:21how your portfolio looks and what the percentages need to be. This helps you build a sustainable
39:27portfolio that makes sure that you're going to be fine no matter what happens in the market.
39:31Okay, moving on to section nine, car buying and how much can you actually afford? With the average
39:38person spending 15 to 20% of their annual income on their car, transportation falls into one of the
39:45top three expenses in our daily life, with the average person spending between 15 to 20% of their
39:50annual income on it. Transportation is also one of the biggest wealth drainers. So I wanted to make sure
39:56we cover this off in the video, and we're going to go through what is the most efficient way to buy a
40:00car, and what guidelines can we follow to make sure we're not paying more than we can actually afford.
40:06So let's go firstly through the main rules or the main guidelines when it comes to buying a car,
40:11and how much you should spend depending on your salary. The first guideline here is a 25 to 35
40:16approach. This method is all about balancing your love for cars, if you have one, with your other
40:21financial needs. If you're more frugal and buying a car doesn't, you don't really care what car you
40:26drive, and you're also on the start of your car ownership journey, then according to this approach,
40:31the lower end, the 25% of your pre-tax annual salary should be your target for a car purchase.
40:37On the other hand, if buying a car sits up high in your priorities, you're willing to trim down on
40:42other areas of your life to accommodate for an additional or higher expense for a car because you
40:47love cars or whatever other reason, then you may be able to push that budget up to 35% of your annual
40:53income. So what do those numbers mean in practice? If you're bringing in 60,000 a year, let's say,
40:59then you're looking at a price tag ranging between 15,000 and 21,000 for your car. If you're on a
41:05salary of 100,000 a year, then the sweet spot for a new car purchase lies between 25,000 and 35,000,
41:11depending on which part of the 25% to 35% you fall into. This isn't a hard and fast rule,
41:16but it's a guideline to keep you from overdoing it. The next guideline you can consider is the
41:2124-10 approach, which is a very simple yet really effective strategy when making a wise car purchase.
41:29So the 20, that represents the down payment you should be making on your car. So let's say you're
41:34eyeing up a 30,000 car, that means 6,000 of that should be your down payment, 20% of 30,000. If you're
41:42not able to afford 6,000, then you want to look for a car that's cheaper below that bracket so that
41:48you can afford to put down 20% of the car price. Next, the four, that represents the term of the
41:54car loan. So simply put, you should aim to pay off your car loan in no more than four years, i.e.
42:0048 months. This helps you to reduce the amount of interest that you'll pay over the term of the
42:05loan. And it also helps make sure you don't end up underwater on your loan, i.e. owing more on your
42:11car than it's actually worth. And then the final, the 10, that's the portion of your total monthly
42:17income that should be allocated to car expenses. This includes not only your monthly car payment,
42:23but also things like maintenance and insurance. So say you earn 60,000 a year or 5,000 a month,
42:31following that 24, 10 approach, your car related expenses shouldn't go over 500 a month. That's
42:37the 10. So to illustrate how all of this works in practice, let's consider two approaches. One
42:42is a common approach that people often do. And then the other one follows a very strict 24, 10
42:48guideline. So scenario one, let's say you find a car that you love, then it's priced at 25,000. You
42:55don't make a down payment. So you actually finance the entire amount. Your loan has an interest rate.
43:00I'm assuming of just under 8%. But instead of sticking to a four-year term loan, you decide to
43:05stretch out that term loan to five years, 60 months. So this means your monthly car payments
43:10would be just over 500 a month, bringing in the total cost of the car, the amount that you're paying
43:16over the five years to over 30,000. And over 5,000 of that is paid in interest alone. Now let's look
43:23at scenario two. And for this one, you're following the 24, 10 rule. So for this, you buy the same
43:2925,000 car. And this time you make a 20% down payment. So you put down 5,000. The interest
43:35rate we're assuming is the same. So we're comparing side by side, assuming an 8% interest rate, but
43:40you decide to stick to a four-year term loan, 48 months. So your monthly payments will now
43:45actually be lower around 488 a month. Not only that, the total cost that you pay in interest
43:53over the loan drops. So instead of 5,400, it's about 3,400. That's almost 2,000 less.
44:01If we look at the total impact, the total cost of the car using the 24, 10 rule, it is just under
44:0728,500 compared to 30,000 if you weren't using the rule. So that's the saving you would have and
44:14how it would work if you simply followed the 24, 10 rule or even a variation of it. And then you have
44:19the cashier approach and that leads me to the third strategy. One of the benefits of buying a car
44:24outright is that you completely eliminate the need for financing, saving you from paying any
44:29interest whatsoever. It sounds simple, but depending on the car that you're buying, this approach requires
44:33a lot of money upfront, which can firstly derail your emergency fund or any other saving goals that
44:39you have planned. And secondly, the reality is a lot of people don't have a large chunk like 25,000 just
44:45sitting in the bank account ready to be spent on a car. So there's a middle ground. And this follows
44:50the principles of fiscal prudence. One alternative is to buy a secondhand car outright using what you
44:56would have spent on a down payment of a new car. So referring back to the previous scenario, this would
45:02mean spending 5,000 on a car outright. Yes, the car you get for 5,000 might not be anything special at all
45:09or the latest model in anything, but this is about trade-offs and the benefit of delayed gratification.
45:16Because if you look at the secondhand car approach over the four-year term, so the same period we were
45:22looking at for the 24-10 rule, if you had been paying 488 a month for a new car over four years,
45:29that amounts to 28,000 in total. But instead, if you use 5,000 of that to buy a car outright,
45:35and let's assume for simplicity, you save the rest, then by the end of year four, you would
45:42have saved up enough to potentially afford to buy a 23,000 car outright in cash after four years.
45:48Again, eliminating the need for any financing. So essentially, by spending less now, you have the
45:54potential to afford more in the future whilst also paying less in interest and minimizing your
46:00exposure to debt. That is the benefit of delayed gratification. And this is the route that I'm
46:04currently taking. But ultimately, these are all guidelines. Ultimately, it comes down to how
46:08important is car ownership for you, how it fits into your overall budget and overall lifestyle as
46:13well. And one more thing to add, if you're buying for a car dealership, they will do everything they
46:18can to fit your monthly payment into your budget without showing you the total cost of what you're
46:23paying for a car. It's extremely important when buying a car to always calculate the total cost of
46:28ownership. All the interest fees, the interest, the hidden costs. I've got a full video on calculating
46:34the true cost of ownership and what to look out for. I'll link it here so you can make a decision
46:38when it comes to the financial side of your car with complete confidence. And finally, moving on to
46:43the last section, which is should you buy or rent a home? This is one of the most important questions
46:49of your financial life. It is one of the biggest financial commitments you are going to make. So let's
46:54cover everything you need to consider to make your decision. We're going to start with the
46:58financial things to consider and then we're going to move on to the psychological aspects. And bear
47:03in mind, this is a huge topic with so many variants and I've tried to keep it as simple as possible to
47:10cover the things that you need to consider and how to go about thinking when it comes to this decision.
47:16So first off, let's talk about the sunk costs. When people think I'm buying a $400,000 home,
47:20they usually think it's just $400,000. But actually, there's so many one-off costs that
47:24you pay for the house that you don't get any money back from. There are four main hidden costs or sunk
47:30costs when buying a house. The first is property taxes. This depends on your country. In the UK,
47:35it's stamp duty. In the US, it's state-based tax. Second thing is legal fees. You'll need to pay a
47:40solicitor to handle things like transferring the ownership, checking documents, sorting out planning
47:44permissions. The third is a valuation fee. This is what you pay your mortgage lender to
47:49assess the value of the home. And then based on that, the mortgage provider will decide how much
47:55they will lend you. And then there are other small fees, which I'll just bucket into miscellaneous,
47:59which think about mortgage arrangement fees, surveyor fees, and these all also add up.
48:04So these transaction costs, they're one-off costs. You don't get any money back from them.
48:09And they could add up to thousands that you will never recover, regardless of how your property
48:14investment performs. And most people forget about them or they don't really add it up into the total
48:19cost. But you really need to consider this because it impacts the break-even timeline when comparing
48:24buying versus renting. Now, if you're renting, the sunk costs are so much simpler. You've got your
48:31monthly rent. So let's say you're paying $1,500 for a one-bed in London. That is your sunk cost.
48:37You're paying for living, but you're not getting money back from it. And then you might have,
48:41if you're relocating, the cost of relocation, that's another sunk cost. The next financial
48:45cost to consider are maintenance costs. How does it compare between buying and renting?
48:49A rule of thumb, when it comes to owning a home, take 1% of your home's value. And that is the
48:54amount that you can spend on maintenance every year. So if your home value is $400,000, then assume
48:59$4,000 towards maintenance on an annual basis, depending on the age and the condition of your home.
49:05Whereas if you rent, you are not on the hook for maintenance. That is the landlord's responsibility.
49:09Sure, you need to pay a security deposit up front, and that can potentially be held back from you,
49:14depending on the condition. You return the flat in, but you are not actually paying for the
49:17ongoing maintenance. Another big thing to consider is the opportunity costs. Before we get into that,
49:23I want to explain how this works. When you're buying a home, there are two big financial costs
49:26that you need to wrap your head around. The first is the down payment. That's a chunk of the purchase
49:31price that you pay up front, straight from your bank account. And it's usually around 20%
49:35of your home's value. So if you're buying a $400,000 home, you need to pay $80,000 up front.
49:42And that's the first one. The second cost is the mortgage repayment. So this is the money
49:46you need to borrow from the bank to cover the remaining 80% of the purchase price. So in this
49:51case, the remaining 80% of that $400,000 home is $320,000. And then you pay that back over time
49:58with interest. So let's say your mortgage rate is 5% and you plan to pay off over 20 years.
50:04That means your monthly payment would be roughly $2,100 per month. And over 20 years, you'd end
50:11up repaying around $506,000 in total, of which $320,000 is the principal. And that's the amount
50:18you borrowed. And then the remaining $186,000, that's the interest. That's the interest that
50:23you're paying to the bank for lending you money.
50:26Now I've explained that, let's look at the opportunity cost. On the plus side, in most
50:30cities, the value of your home will appreciate. So let's say the value of your $400,000 home
50:35grows at 3% per year. After 10 years, that house would be worth about $537,000. So you've
50:41gained roughly $137,000 in value from appreciation. But on the flip side, you had to spend the $80,000
50:49up front for the down payment and you committed to monthly mortgage payments and you could have
50:53spent that money somewhere else instead. For instance, you could have put that amount,
50:58that $80,000 deposit and the remaining mortgage repayments, you could have invested that same
51:03money into the stock market or another investment. If you put it into the stock market, assuming
51:08it grows at 7% per year, which is the historical average for the S&P 500, taking into account
51:13inflation, then you would have $157,000, which is a profit of $77,000. But you do still have
51:22to think about where you're going to live. What are you going to rent? Because you still
51:25have to live somewhere and then that's another cost that you have to take into account. Whereas
51:28when you're buying, you don't have to think about rent because your mortgage is paying
51:32off the principal as well, which is gradually adding to your net worth as we spoke about in
51:37the assets and liability section of this video. So if you're weighing up the opportunity costs
51:42from renting versus buying, the main question we really want to ask ourselves is what would
51:47I be doing with that money if I didn't put it towards a down payment for a house? And
51:52secondly, what would leave me with more wealth in two years, five years or 10 years time?
51:57This has so many moving parts to it. There's so many costs to consider. And I know you've
52:02probably heard this so much, but there really is so specific to what you're going to do with
52:07that money and where you're going to invest it and what house and whatever you buy. Now, those
52:12are the financial things to consider. There are also psychological things because buying
52:17gives you stability and you cannot put a price on that. You won't be asked to leave by a landlord.
52:22You can do whatever you want to the house. You can convert the loft. You could drill holes in the
52:26wall and you don't have to ask your landlord specifically, at least for permission. You can't
52:30do that with renting. And for a lot of people, just the psychological comfort of having a house
52:34way exceeds the financial costs or the one of costs that come with it. Feeling like you have a place
52:39to yourself and you won't have to keep moving around and relocating. On the other hand,
52:43renting offers a huge amount of flexibility. You can move to a bigger place. You can move to a
52:48smaller place. You could test out new areas. You could relocate easily. And you don't have to worry
52:52about fixing anything or the maintenance because that's looked after by the landlord. People might
52:56just believe that buying is always better than renting because from our parents' generation,
53:00that usually was always the case. But unfortunately, it's not the case in this generation.
53:06Markets change. Interest rates fluctuate. What worked in the past may not be the optimal strategy
53:11today. So if you're deciding between buying and renting, hopefully that gives you a framework
53:16to think about. Consider your specific financial situation, the market conditions, the lifestyle
53:21needs and the long-term goals rather than simply following conventional wisdom. So that is it. That
53:28covers pretty much everything you need to know to get started and to build your foundations with
53:33financial literacy. You can come back anytime and watch this video again. It will stay on this channel.
53:38If you do want to check out any of the tools, the guides, the calculators that were featured in this
53:42video, they are part of my financial wellbeing toolkit. This is a toolkit designed to help you manage your
53:48money like the top 1%. And what you saw today, the templates that you saw, it's about 5% of what's
53:54actually included. You get your financial dashboard to keep you on track with your progress,
53:59including your income, your spending, your monthly check-ins, your debt, your goals, your investments.
54:03It's all in one place. You also get access to 10 interactive workbooks that you can tackle
54:08at your own pace. The idea is to take your finances from complete chaos to complete clarity.
54:14They're filled with quizzes, with self-assessments, with calculators at the end of each section. In there,
54:19you will find everything you need to build a really solid financial plan that will help you turn
54:24your dreams into reality. You can find more information on nisha.me forward slash plan for
54:30all of the details, or there's a link in the video description as well. And there is currently
54:34an early access code for the first 500 people. Thank you for watching.
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