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8 Money Habits That Keep You Poor (STOP SELF SABOTAGE) | Rose Han | YouTubeToText
YouTube Transcript: 8 Money Habits That Keep You Poor (STOP SELF SABOTAGE)
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most of what we do on a daily basis is automatic like brushing your teeth you
don't even think about it and most of the time you don't even realize that
you're doing it this is especially true with how you handle your money in this
video I'm gonna talk about eight money habits that keep you poor before
recognizing these eight bad money habits I was always in debt and had trouble
saving any money but once I realized what I was doing I started replacing bad
money habits with good money habits and that's exactly what helped me pay off
$80,000 of student loans in just a few years and to finally start investing my
money so that I could work smarter not harder your habits have ripple effects
that get compounded over time and they ultimately determine who you become and
whether you'll end up rich or poor that's why it's super important to
recognize any bad money habits you have early on and replace them with good
money habits so hit that like button and let's get started money habit number one
is paying yourself last here's what I mean by this as soon as you get paid you
pay your rent your phone bill your gym membership you go out to dinner you buy
something nice for yourself and you're planning to save if there's any money
left at the end of the month problem is there's never any money left to save
sound familiar people who get ahead financially do the
exact opposite they pay themselves first that means that before they start paying
their bills swiping their cards left and right and giving money to everyone else
in their mother except for themselves they put a portion of everything they
make into their own pockets first then they pay their bills and live on what's
left they prioritize making themselves richer versus making other people richer
people who are good at saving money all understand something called Parkinson's
law so Parkinson's law is the principle that demands will always expand to
consume all available resources that's why if you have a week to finish a
project you end up taking all that time to finish it and you were probably
pretty inefficient with your time whereas if you have just one hour to
finish that same project you'll be super focused and efficient
and still get it done so work expands to consume all available time and it's the
same with money you're spending will expand to consume all available money
whether you have a hundred dollars or a hundred thousand dollars your expenses
will keep increasing to consume all the money that you have that's why making
more and more money isn't always the answer
and saving money after after you do all your spending is just not gonna work
because your spending will always rise to just eat up all that money you got to
pay yourself first you gotta treat saving money like a bill so as soon as
you get paid commit to setting aside 10% or whatever percentage that you can
handle and put that towards savings and investments and then just live on what's
left so if you want to stop letting money slip through your fingers and you
actually want to start keeping some of what you make for yourself then give up
money habit number one for good the next money habit to give up it's trying to
keep up with friends who have expensive tastes so do you have friends who always
want you to go out to expensive restaurants and go shopping with them
and go on trips with them and stay in nice hotels so if you have friends with
bigger budgets and yours then it's okay to be authentic and say just you know
hey I can't I can't do that because I'm working towards some financial goals
right now and I need to save money it's out of my budget if there are real
friends they'll understand everyone has very different levels of
tastes as well as very different budgets so trying to keep up with everyone
around you is going to leave you broke and in debt this includes friends as
well as people you see on social media the reality is the average American has
very little in savings and an average of thirty eight thousand dollars in debt
and that's not even including mortgages so a lot of what you see in terms of
amazing lifestyles on social media and whatever is often just an illusion
in fact I personally know someone who is always posting Instagram photos of
herself traveling to all kinds of exotic locations and it really looks like she
has this glamorous awesome life but the reality is she has $20,000 in credit
card debt and has zero in savings and investments so don't
be fooled a lot of what you see is not real and chasing experiences just so you
can post a cool photo on Instagram or look good to everybody else is a recipe
for ending up broke I think it basically comes down to this
would you rather look rich or would you rather be rich if you dream about
becoming financially independent one day you have to stop caring what everyone
else thinks about you because no one else is gonna make it happen for you but
you just learn how to speak up for yourself don't be afraid to turn down
invitations or don't be afraid to just adjust cheaper activities for you and
your friends because chances are people will respect you for having your
priorities straight and it'll probably inspire them to reassess their financial
priorities as well the third money habit to give up it's putting everything on
your credit card for the cash back rewards and award miles now don't get me
wrong credit cards are amazing I love my
credit card I haven't paid for a flight in years thanks to the award miles that
I rack up on my United explorer card but often times I find that people end up
spending way more on their credit card than they would have spent otherwise and
that basically just cancels out all the benefits of having these credit card
rewards I'm freakin guilty of this as well when I'm considering whether to
make a purchase or not sometimes I find myself justifying it because I'm like
hey well at least I'll get miles for it and this is even if I can't actually
afford it so this is a very very very slippery slope ever since I realized
this pattern I've just stopped putting everything on my card and here's what I
do instead for everyday small items like coffees and cab rides I just pay for it
with my debit card in cash but if there's anything that's a hundred
dollars or more like facials and hotels courses things like that I basically put
it on my credit card to get the award miles but then I pay it off immediately
like within seconds of making the purchase and I just do it all on my
phone that way it forces me to only buy things I can afford to pay for in cash
while also allowing me to get those vials and turn all those amazing credit
card benefits before I started doing it this way I would usually just rack up a
balance and then every month I just be shocked at how much I'd spent because
putting things on plastic really has a way of just making you spend a little to
mindlessly especially if you're justifying your spending because of the
rewards so the money habit to give up is to make sure you only put things on your
rewards credit card if you have the money to pay for it in cash and don't
justify the purchase just because of the points or the or miles money habit
number four is having disorganized finances having disorganized finances is
basically another way of keeping your head in the sand if you have credit
cards open everywhere student loans that you don't really know the balance for
and you're not really sure what you're spending every month then it's really
time to consolidate so there's a lot of really awesome apps out there that make
it super easy to track all your financial stuff for example I used to
use mint and I really liked it you can connect your bank accounts and your
credit cards and they'll look at your spending and your income and tell you
what you're spending looks like every month and you can also put in all your
accounts and look at your network than how it changes over time and it really
only takes a few minutes to setup it's totally worth your time and ever since
I've actually switched over to tracking my finances in a spreadsheet versus in
apps cuz I'm just a big nerd and I love my spreadsheets and I look at my
spreadsheet to update my net worth every month that way I can see the progress
that I'm making month by month and not only is this hugely motivating but it
also forces me to keep my finances very organized because I know where all my
money is at all times something also helps with keeping your finances
organized is choosing a financial institution that offers a wide range of
services so that you can do all your financial stuff in one place the less
online usernames and passwords you have to keep track of the better for example
I have my personal checking account as well as most of my investment accounts
like my Roth IRA and my say and blah blah blah I have all that
fidelity so I could access all my financial stuff with one username and it
was really convenient another place that offers a full suite of services is
betterment which offers a checking account a high-yield savings account as
well as different investment accounts for all your financial goals either way
with technology and all these amazing new platforms it's really not hard to
get and stay organized with your finances the key is to just get up that
courage to really look at where you stand financially and I know it can be a
humbling and sobering moment for some people but until you know what your
starting point is it's impossible to get to where you want to be you know how can
you get to where you want to be if you don't know where you are now so give up
the habit of staying confused about your finances build a habit of staying
organized and looking at your numbers regularly money habit number five is
numbing yourself to debts we live in a society where practically everybody has
debt it's become totally normal for someone in their 20s to have tens of
thousands of dollars of student loan debt and it's totally normal for someone
in their 40s to have a mortgage a car loan credit card debt and possibly even
be paying off their student loans still but listen up just because everyone else
lives with debt doesn't make it okay for you to live with debt either when I was
applying to colleges I had the option to go to USC which is a school in LA on a
full ride for my tuition however the school that I really wanted to go to was
NYU and I chose to go to NYU because that's the school that I really wanted
to go to except that I didn't get anywhere near as much in scholarships to
NYU as I did to USC and honestly sometimes I wonder where I would be if I
just gone to USC and didn't graduate with student loans don't get me wrong I
don't have any regrets I really loved going to NYU
but because debt is so normalized in our society I just didn't even think twice
about signing away my life to student loans as an eighteen year old it's crazy
bottom line don't get into debt if you don't have to
just pay for things in cash don't do things if you can't afford it don't go
into debt for college and months unless you absolutely have to and you know you
you'll get a job that will allow you to pay that off quickly don't get a car
loan to buy a car don't get a mortgage if you're still
paying off student loans it's just too much America is one of the wealthiest
countries in the world yet somehow it's considered ok to have crop loads of debt
these days the status quo is to live with debt but don't settle for the
status quo do whatever you need to do to live debt-free money habit number six is
paying extra due to lack of planning I used to be the queen of cheap $10
umbrellas because I always forgot to check the weather and I just end up
getting caught in the rain and having to run into a drugstore to just buy another
umbrella despite having like multiple umbrellas at home not planning in
advance and being caught unprepared always ends up costing you money so this
could be things like having to take an uber instead of using your subway card
it could also be like paying overdraft fees because you didn't check your
account balance another way is you put things on a
credit card and you just end up paying all these interest charges because you
didn't set money aside for unexpected unexpected expenses no I'm all about
Yolo and living spontaneously but if you're always having to buy things you
already have at home or just paying extra fees and interest because you're
unprepared then just take a few extra minutes to plan ahead check the weather
before you leave the house leave buffer time in between appointments look at
your account balance every so often and things like that even just a little bit
of planning will save you tons of money and at the end of the day having money
in the bank is what allows you to really Yolo as much as you want money habit
number seven is paying too much in taxes taxes are gonna be the single biggest
expense in your lifetime so why not do it you can to cut down on your tax bill
most of the tax blue bowls are for the rich for people who own assets and
businesses but there are a lot of tax loopholes available to the average
person as well for example most people have a 401
through their employer and contributing to your 401k is a way to directly reduce
your taxable income the HSA is another way to reduce your taxable income and
also everyone is eligible to open an IRA either a traditional IRA or a Roth IRA
and these are investment accounts that shelter your dividends and profits from
taxes so I'll talk more about ways to cut down on your tax bill in this video
right here so definitely check it out to learn more because there are a lot of
ways you can start paying less taxes starting today
bad money habit number eight is putting off investing until you have more money
like I mentioned in my first tip putting things off like saving money and
investing for the future that is a very slippery slope you might be thinking
that you'll start doing it one day when you have more money but more often than
not that becomes a never-ending cycle of procrastination and excuses there's
always gonna be reasons why you can't invest not enough money not enough
knowledge not enough time other priorities etc etc etc but the longer
you put off investing the harder you'll have to work to get to the same level of
financial freedom as someone who starts investing earlier someone who starts
investing at age 20 can become a millionaire by age 50 by investing just
one hundred eighty thousand dollars of their own money however if they were to
wait until age thirty to start investing they would need to invest almost twice
as much of their own money to reach millionaire status by age fifty which
means the sooner you start the less heavy lifting you have to do and the
less of your own money it takes to get to a millionaire even if it's just fifty
dollars a month start investing now don't wait it's
really easy to get started investing if you just stick your money in some
low-cost index funds and I talk more about how to pick good index funds in
this video right here so check it out to learn more and I also have a ton of
great investing tutorials on my channel so just set aside a weekend to learn and
get started you'll be glad you started when you did if the idea of saving and
your money just isn't fun for you then just try to reframe how you think about
it it's not about discipline and deprivation it's about taking care of
future you it's a form of self-care and self-care is fun because it makes you
feel good and makes your life so much better if you've recognized yourself
doing any of these money habits just be gentle with yourself you know don't beat
yourself up about it because most of us don't learn this
stuff in school and we don't learn it from our parents
most of us people who have good money habits usually just learn it the hard
way by screwing up and wanting to do better I'm definitely not perfect by any
means either so even though I'm a youtuber that talks about money a lot of
what I talked about in this video is stuff that I needed to be reminded of as
well it's all about having the awareness and the financial literacy to notice
whether your daily actions bring you closer to your financial goals or take
you further from your financial goals and it's never too late to replace bad
money habits with good money habits and to just improve your relationship with
money so if you want to keep the ball rolling make sure to check out my
channel for more videos to inspire you and teach you more about money please
like this video if you liked it and I hope you'll subscribe to my channel
because I'd love to connect with you again I post new money and investing
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