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Financial Literacy Lesson 1 – Introduction, Emergency Fund, and Subscriptions

This will be a 21 part series! So you’ll be getting A LOT OF EDUCATION and by the end of it you’ll be more financially literate and prepared than the rest of the population!

Financial Literacy Introduction

Welcome to Financial Literacy – the Ultimate Starter Guide. We’ll be talking about “How Money Works” because if you found your way here, you are a part of the curious bunch that’s looking for something more.

This is going to be a 21 part series and as you would any other legitimate course or curriculum in college or university; we will start off with an introduction.

First off, as a course, I will keep this entire series structured. But unlike most courses, where you have a teacher or instructor that is monotone or boring, I aim to keep this course entertaining. There will be stories. There will be ranting. Maybe a little bit of racism and bigotry. If you are easily offended, then maybe this isn’t the course for you? (I’m not trying to help everyone because those who help everyone, helps no one – I’m interested in helping those who want to be helped)

Sorry, you’ll have to deal with my weird sense of humor. Btw, have you noticed what nationality I am yet? I’ll make the big reveal a little later.

Heh. Are you expecting a syllabus? What’s the fun in that? You’ll have nothing to anticipate if I did that. I’m here to give you some education (if you want it, I hate using the term “teach”, makes me feel pompous), while at the same time keep you at the edge of your seats.

But before we get there, I have a confession to make:

I am not a financial advisor; I’m just a client that has grown a lot of money by not saving through the help of my own TRUSTED financial advisor.

So, I don’t earn a living through financial advising. To be transparent, my occupation is a software engineer with a keen interest in personal finance and money, because as you’ll find out through my stories, being raised by an immigrant family – money was not readily available.

I think this gives me the best credibility for “educating” because I’m not a financial advisor that makes his income through you. I’m simply offering education. You can take it or leave it.

If you want to work with my financial advisor (USA only), you can contact me and I can refer you to him. Maybe he will give me a referral fee?

Anyways, you are learning from a client that has achieved results and have acquired a wealth of information that has been structured in a way that can be taken and implemented by anyone at any level. Whether you are completely new and know nothing about personal finance to someone who knows a lot about personal finance. I find there are little gold knowledge nuggets in every source of information (books, courses, podcasts, videos).

Here’s what I achieved:

  1. Over $100,000 in assets over 3 years working a 9-5 job
  2. A $10,000 Emergency Fund that will protect me for 6 months should I lose my job (6 months in the USA, 12 months+ living in a cheaper country)
  3. No debt, I travel with top status (i.e. 35% discounts off first class/business class flights)
  4. Most importantly, I have the necessary cash needed at any time to start and work on my DREAM projects that HELP PEOPLE (this is one of them).

Here’s why this entire guide is relatable for the person working a 9-5 job or is on salary. The reason being that right now, I’m still working a 9-5 job. I’m not one of the millionaires or billionaires that give you advice coming from a millionaire or billionaire level. That would not resonate with YOU because you’re likely not a millionaire or billionaire (yet) if you’re reading this.

You and I, we’re both on salary right now and are at the same level. Maybe I have a little bit more personal finance knowledge (by luck – and that’s all the bragging you’ll get from me), but at the end of this series, you’ll have the same knowledge I have (kind of, because while you’re reading this, I am still learning – gotta stay ahead yo)!

The Backstory For My Financial Literacy

Today, I want to talk about how money works. Also known as financial literacy, I’m writing in the midst of the coronavirus pandemic and there’s a lot going on right now.

A lot of people are losing jobs and a lot of businesses are shutting down FOR GOOD. That is, they are NOT coming back after this pandemic ends.

I’ll be blunt; a lot of people are not well versed in personal finance. They are financially illiterate OR don’t have any knowledge in personal finance. Worst off, some don’t even recognize the problem. I know some of those people. It’s unfortunate…

However, I am unwilling to help people who don’t want to be helped AND when you don’t recognize the problem, you don’t recognize that you need help, and it’ll be a waste of time for me because it will be like talking to a rock…

Enough ranting, here’s the back-story…

I’m going to share what I’ve learned throughout my journey over the years.

I started my journey learning about personal finance when I was 18. Much of it centers on earning, giving, investing, saving, and spending. We’ll talk about this more later; I structured these concepts in this order for a reason.

I was fortunate enough to meet my Canadian financial advisor when I was 18, Lorenzo. It was in Vancouver, Canada where I was born and raised. He took the liberty to teach me how money worked free of charge, and I felt I was very lucky to have gotten advice for free. Wait for it…

Of course, we developed a relationship and I offered him my money to manage – which was not a lot back then, but he was happy to do it and help me get started on my journey. THERE IT IS. HE EDUCATED ME AND ENDED UP AS MY FINANCIAL ADVISOR.

It’s been a decade since we’ve been working together.

Financial Literacy and Stereotypes Around Financial Advisors

I think there is a stereotype out there that financial advisors are not to be trusted OR they cost money AND that is true! There are financial advisors that definitely fit the category! But there are even more financial advisors out there who want to HELP you and look out for you! They would offer to educate you for free because they realize the importance of building a relationship BEFORE having a good financial education and financial literacy.

Because admit it, would you listen to some stranger who tried to sell you “investments” before establishing a trusted relationship with you?

NO!

These financial advisors would educate you until you are comfortable to decide whether you want to work with them OR not!

This will be a 21 part series! So you’ll be getting A LOT OF EDUCATION and by the end of it you’ll be more financially literate and prepared than the rest of the population!

This series is intended for people who are NOT in the financial industry, so if you’re SUPER advanced, who knows? You might learn something you might not know about. If you are new or wanting to learn more about the possibilities with your personal finance, then I think this series will be quite valuable.

Stick along with the journey, it’ll be entertaining!

Where Did You Learn Personal Finance?

If you live in the USA or Canada, you didn’t learn it!

I didn’t learn it in school. If you’re reading this, neither did you apparently.

I was fortunate enough to have been really interested in how money worked since I was younger because I lived, grew up, and was raised in a low-income family, so money was always tight!

Money Needs To Be Studied

We live in a culture that shuns talking about money. How do we study it if we don’t talk about it?

We learn about physics, math, and chemistry in school. That’s where we learn about geometry, algebra, gravity, the periodic table, etc. there are courses for that! It’s mandatory!

But there isn’t a class for personal finance!

I was lucky, in our high school, we had accounting and that was it! Those were the only money related courses, which is SUCH a shame because people graduate high school and they go to university and get their first credit cards WITHOUT KNOWING how money works, how credit works, how interest rates work, and how if you use a credit card and you miss payments, you will be hit with heavy interest rates.

That’s how credit card companies make money.

Oh, and it’s not just US or Canada.

It’s everywhere. We are in this together!

That’s why people freak out when Coronavirus happens and the world shuts down. A lot of people have businesses and when the businesses shut down, the cash flow shuts down. The one source of income is cut, that means that they’re going to die if they don’t have enough to float them. I’m not being dramatic, it is reality.

Float: The amount of money the business has to keep them running while they’re shut down. Restaurants typically have a 2-3 day float I believe.

A lot of businesses won’t make it, but a lot of new businesses will spring up. Slack, zoom, and Airbnb were created during 08-09, or the last global financial crisis.

Emergency Funds

People think it’s OK to live without EMERGENCY FUNDS.

WRITE THIS DOWN: I MUST have 6 months emergency funds JUST IN CASE the unexpected happens.

The coronavirus pandemic was an unexpected event that nobody expected. Unexpected events happen, if you get a flat driving down a highway, that’s an unexpected event.

What happens if you don’t get paid a lot and cannot afford to fix your flat?

Then you can’t use your car right?

Then you can’t go to work right?

Then you can’t make money right?

There you go, unexpected event. Start your emergency fund NOW if you don’t have one.

That emergency fund for six months will cover you for some unexpected event that you didn’t see coming.

Six months is two financial/fiscal quarters. A recession is when there are two quarters when the economy is just not doing good (i.e. there’s rising unemployment, markets are down). A Depression is when this happens for four quarters.

Quarter: 3 months. There’s 12 months in a year. A quarter is 3 months. There’s four quarters in a year. Q1. Q2. Q3. Q4.

In these cases, I just want you to have six months emergency fund to give you that piece of mind that when something unexpected happens, you got six months of emergency funds to figure something out. Six months is typically enough time to get things sorted out.

I quit my last job because the project manager was an asshole and I did not like him and all. Every single day was me waking up, feeling like I’m walking on egg shells because there was so much micromanaging involved. I’m a person that hates to be micromanaged.

Can you relate?

I struggled waking up every morning for work; I was not looking forward to it. Therefore, I quit.

I quit with $10,000 in my bank account. That lasted me for a good five months. I was about to run dry on my money – my emergency fund, and was about to have to move back in with my parents when I got the job I am at now. That’s the life saving job that put me in the US.

Literally, at that time I had $10,000 to last me for as long as possible. At the end of month five, things were looking pretty tight because I was down to my last $2,000. I had one more month to get things together and at the time, I was going through rounds of interviews. Luckily enough, I had a job offer that would put me in the States at a $75,000 USD annual salary.

This was COMPLETELY different than the job I quit in Vancouver, Canada because I was earning $50,000 CAD, which is like $35-40,000 USD as a software engineer.

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I’m going to be honest, I know WE DON’T TALK ABOUT SALARIES IN NORTH AMERICA, and I’m not bragging (because honestly, it’s not an amount worth bragging about), but I’m trying to give you something concrete and specific to show you where I’m coming from.

I hate it when people talk about being vulnerable with themselves and with others and NEVER GET INTO THE PERSONAL DETAILS ABOUT THEMSELVES. To me, that’s not being “vulnerable”, that’s being a phony. The specifics give us benchmarks and how things will work out.

So, if you’re living fine on $50,000, you will now know that you’ll probably last for 5 months with a $10,000 emergency fund. How? Because I’m living proof of that.

I’m giving you numbers and will keep giving you numbers to give you an idea of where I was. With all that ranting done, write this down:

I MUST have 6 months emergency funds JUST IN CASE the unexpected happens.

People Will Tell You What To Do With Your Money If You’re Financially Illiterate

A lot of people are telling you what to do with your money.

Think about UberEats and Doordash, if they didn’t exist, you wouldn’t use them.

I’m living with roommates at the time of writing, because I’m single, and it saves me money! But I’m going to find a place for myself soon (I’m getting tired of roommates).

I have a roommate that spends everyday buying McDonalds because they don’t have a car (see, things are inconvenient in the USA without a car – remember that flat tire problem?). They get UberEats to deliver it to them every day for lunch. UberEats is 15% of the order’s subtotal and DoorDash is a $5.99 flat rate.

I’m not even talking about 5 days, I’m talking about a week! 7 days!

But let’s say the delivery fee is $3. So, we have $3 x 7 days, giving us $21/week on delivery! That’s crazy! To make this even worse, we live like 10 minutes walking distance from McDonalds!

That doesn’t make sense to me, at all!

If UberEats didn’t exist, people wouldn’t be wasting money on delivery and would rather be saving and investing.

This is all to say there are a lot of people telling you what to do with your money…!

Don’t even get me started on Netflix… It’s a time sink. Time could be better used investing in yourself (you’re doing it now by reading this).

Financial Investors vs. Financial Consumers (SUCKERS)

A lot of people are telling you what to do with your money.

Think about UberEats and Doordash, if they didn’t exist, you wouldn’t use them.

I’m living with roommates at the time of writing, because I’m single, and it saves me money! But I’m going to find a place for myself soon (I’m getting tired of roommates).

I have a roommate that spends everyday buying McDonalds because they don’t have a car (see, things are inconvenient in the USA without a car – remember that flat tire problem?). They get UberEats to deliver it to them every day for lunch. UberEats is 15% of the order’s subtotal and DoorDash is a $5.99 flat rate.

I’m not even talking about 5 days, I’m talking about a week! 7 days!

But let’s say the delivery fee is $3. So, we have $3 x 7 days, giving us $21/week on delivery! That’s crazy! To make this even worse, we live like 10 minutes walking distance from McDonalds!

That doesn’t make sense to me, at all!

If UberEats didn’t exist, people wouldn’t be wasting money on delivery and would rather be saving and investing.

This is all to say there are a lot of people telling you what to do with your money…!

Don’t even get me started on Netflix… It’s a time sink. Time could be better used investing in yourself (you’re doing it now by reading this).

We’re all suckers, in some shape or form, and even investors have subscriptions too. However, the difference is that their subscription adds value to their lives. Netflix DOES NOT.

Your Financial Literacy Homework – Necessities

I know some subscriptions are necessary, but I just want you to ask yourself whether they are all necessary…

If you’re on a phone plan, you can most likely get a cheaper plan that can get you everything you need and want and save a couple dollars.

For example, I went from Verizon to Google Fi because Fi works all around the world and I can pay as I go.

Therefore, I want you to do some homework (it’s a course afterall):

Take 30 minutes and make a list of all the subscription services you paid for every month and ask yourself which ones are necessary and which ones you can live without.

Phone bill, internet bill, rent is all necessary…

Netflix, Hulu, Spotify Premium is NOT! Get rid of them!

This will set the groundwork for our personal finance strategy.

Alright, that’s it for now. Go do your homework and we’ll talk soon.

Share your way to success,

Donald

P.S. If you know someone who will benefit from this course, please share this course with them, just copy the link to this post and send it to them.

P.P.S. If you haven’t joined our newsletter, I encourage you to do it now. It will be where we go in depth on personal finance concepts, strategies, tips, and tricks you can implement and take advantage of. It’s exclusive information you don’t want to miss out on because I get it from financial experts (friends and those I invest with) who do this stuff for a living. Best of all, you get all this information FREE.

Financial Literacy Lesson 1 – Introduction, Emergency Fund, and Subscriptions VIDEO

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