00:00Your Best Self is brought to you by Maybelline New York.
00:11Most of us weren't taught how to budget, build, credit or invest money in school.
00:16Yet, every day we are making financial decisions like buying lunch, shopping online or deciding what to do with our
00:23paycheck.
00:24Financial literacy coach and owner of the Financial Coaching Center Limited, Nicholas Dean, says
00:30understanding money and how it works is one of the most important life skills anyone can have.
00:36When you don't have financial literacy, what will happen?
00:39Basically, you will make poor decisions when it comes to your money.
00:42And some of the poor decisions that you make could result in not having any money saved up for the
00:48future or the things that you need.
00:50And you could probably find yourself in a lot of debt.
00:52So, one of the key parts of financial literacy, I would say, is understanding financial institutions.
00:59And while many people believe financial planning is something to think about later in life, Dean says the best time
01:07to start is now.
01:08The first step is knowing where your money is going.
01:11We look at the income that you have coming in and how that income is allocated would be based on
01:18the things that you need to pay for on a monthly basis.
01:21The things that are not monthly, which I call periodic expenses, like birthdays, anniversaries, car insurance, anything, school fees.
01:32Anything that is not a monthly bill, you should be making a monthly allocation from your monthly paycheck towards those
01:39things.
01:39So, the third part of your budget or the third part of how you allocate your income would be how
01:45do you save towards the various goals that you have?
01:48And you have to identify what your goals are in order to know how much money you should be setting
01:53aside for those particular goals.
01:56So, goal setting is a key part of really good budgeting.
02:00It may not sound exciting, but creating a simple budget can help prevent one common problem.
02:06Wondering where all your money disappeared to before the month is over.
02:11He says separating your needs from your wants is a good way for people to save and manage their money
02:17better.
02:18I would say the needs start with the things that are essential in your life.
02:22For instance, food, clothing, and shelter.
02:23You know, you need to have food.
02:25You need to have clothing.
02:26You need to have shelter.
02:27Now, if shelter is taken care of somebody by somebody else, like if you're a young person, you're living in
02:31a parent's home,
02:32then you may have to contribute to the household, but then there are other things that you may need.
02:40And you, again, the needs would be what goals are you shooting for?
02:44You know, do you have enough money to take care of emergencies?
02:46That's leading you towards financial independence.
02:49So, if you're not putting money towards that, that's a need.
02:53If you're not putting money towards that, then you're pretty much catering to your wants.
02:58And what your wants are is things that you could live without, really.
03:03It wouldn't affect, you know, the normal run of your life.
03:07Financial literacy isn't just about making money.
03:09It's also about avoiding costly mistakes.
03:12Credit cards, loans, and the get-rich-quick schemes can be tempting,
03:17but understanding how debt works can save you from financial headaches in life.
03:22A credit card, you have to first understand because when you get a credit card,
03:27but if you're eligible for a credit card from a bank, most times it's from a bank,
03:32they don't explain to you how it's supposed to work.
03:34But a credit card is borrowed funds.
03:37So, if you use your credit card to pay for something,
03:42you pay for something to eat today, right?
03:46Or you bought some item of clothing or something like that.
03:48You're actually borrowing the bank's money to purchase the thing.
03:52So, you're not owing the bank money.
03:53You have to make sure that you have that money set aside somewhere
03:57to pay that credit card, to pay for that expense.
04:01So, your credit card has to be supported by a good budget,
04:04and it is just a convenience tool to give you a method of payment
04:11or to access goods and services that are within your budget.
04:14And for those who are looking to improve their financial knowledge,
04:18they encourage you to not spend all your money at once.
04:21Creating a budget, setting goals, or seeking advice from a financial professional
04:26can help you build a strong financial foundation.
04:29But becoming financially literate does not require a finance degree.
04:34It starts with simple everyday decisions,
04:37spending wisely, saving consistently,
04:39and learning as much as you can about managing your money.
04:43Earn more, spend less, and invest wisely.
04:45Those are the three things.
04:46Those are the secret.
04:47Actually, it's four things.
04:49It's earn more, try to earn more, spend less, or spend wisely.
04:53Invest what you save, and then protect against risk like health, risk, and stuff like that.
04:58That's where you buy the right type of insurance.
05:00So, those are my four pillars for creating wealth.
05:05Earn more, spend less, invest wisely,
05:07and insure yourself against, insure your finances against possible risks that can set you back.
05:15Financial experts say the goal is not to be rich overnight,
05:19but to make informed decisions that can help you build long-term financial stability and freedom.
05:25Until next time, I am Charlotte Kisto reminding you to be your best self.
05:37Your best self was brought to you by Maybelline New York.
05:41Maybelline New York.
05:41Maybelline New York.
05:41Maybelline New York.
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