Our education system has failed us by not teaching anything about financial literacy

Our education system has failed us by not teaching anything about financial literacy, but luckily for you, I can't be chill about anything. So here's a crash course about everything I've learned about personal finance that you should know, explained through Calico Critters. This is what we're trying to avoid. Imagine there's three 25 year old besties living in the same city and making the same income. Wyd when my gang pull up? This is Charli. She has no degree, she's a server at Twin Peaks, and she has big dreams of becoming a pop star. No debt and a $10,000 emergency fund. This is Bae. She has a Masters in Fine Arts and a 9-5 fake art job and big dreams of buying a cozy home. She has $75k in debt and $5,000 emergency fund. And last but not least, we have Kitty. She has a business bachelors, personal assistant for a riot grl band, and she has big dreams of a birkin bag. $25,000 in debt and $3,000 in emergency fund cash. Remember that. So, Charli's been working extra gigs, Bae gets a promotion, and Kitty's band made it big. So each girly pop makes 100k now. They think, what should I do with all this extra money? Let's find out. Charli started investing $5,000 a month, which is 60% of her income. Her value was more about staying home and working on her music career than going out and spending. But Bae decides to upgrade her life to match her new role. Her "investments" are $10,000 of designer clothes and a $60,000 new car. Living out of her means, she cannot pay credit cards and her credit score tanks. Kitty also decides to upgrade her life. This is them enabling each other. She gets that birkin bag, as you can see, she signs a bigger apartment, she goes out for every meal, and she's clubbing almost every night. But here's what you lowkey should do. I'm going to need y'all to lock in. Okay, step one, make sure you have some sort of savings. $500 to 2k can cover unexpected life events such as your car breaking down, health expenses, or getting fired. Preparing could save you from going into more debt. Step two, pay off that high interest debt. This is them drowning in debt. Credit card rates, that's money that's accumulating even more than what you actually used, and is often 20% or more, far exceed what savings can earn. Therefore, debt grows more when you ignore and loses you money. Like paying off $10,000 guarantees $2,000 that you don't have to pay. Step three, build that emergency fund. An emergency fund is essentially monthly expenses times three to six months. Charli and Kitty should have more being that they have more fluctuating jobs with contract and tip-based jobs, but Bae could aim for less because her income is more consistent with a 9-5. Here's an example. Let's say that all of your monthly costs are $1,700, so for three months that would be about $5,000 and six months is $10,000. Step four, maximize retirement. Now remember, a retirement account is just a container. You have to invest that money to make money. And with a 401k, your employer usually selects investments, but with a Roth, you manage your own. Also, let's say with a 9-5 job they match up to 3% of your 100k salary to your 401k, contribute 3k year and that's 6,000 total and half was free. Also the total Roth IRA usually has an annual maximum of $7,500, no matter how many you have, but you can have both a Roth and a 401k. So retirement growth, at an average annual 7% growth rate with $7,500 a year, that's maximizing it. Skip 30 years, 225,000 you contributed, which grew to 708,000. Now this one's crazy, 50 years, you contributed 375,000 and it grew to 3.5 million. But the money you make in these accounts can only be withdrawn untaxed at 59 and a half years old. I did recently learn that no matter how old you are, you can take out whatever amount you put in untaxed, but you can't take whatever amount you've made untaxed. So in 30 years I'll be 53, I'd be able to take 225,000 now but not the whole 708,000 until I'm 59 and a half. But yeah, being consistent over 50 years, 3.5 million. Let that sink in. Now I'm not even surpassing that annual growth rate of 7%. Final step, build wealth. And even if debt isn't fully paid off and retirement isn't fully maxed, invest what you can because the best time to invest is yesterday. Stay with me guys, we're going to get back to our girls in a second, but this is a brokerage account. It's a self-managed place to buy and sell investments, stocks, ETF, we'll get into that in a second. I use Vanguard, but any of these are really good. Unlike a retirement account, there's no contribution limits. So deposit or withdraw any amount whenever. If you've ever wondered what the difference is on stocks and bonds, I got you. Stock is where you own a small part of a single business. When demand goes up, stock price goes up and now you have more money. The risk is somewhat high because businesses can fail and you're the last one to be paid, but there's a lot more growth opportunity. A bond is where you lend money to a group or government and they pay you a regular interest over time. Less volatile, so there's a lower chance of losing money, but it pays much less. People usually do that later on in life just to make sure that they have their money and it stays consistent. An ETF is a little basket of stocks that holds many different investments at once, like the S&P 500 we all hear about that holds shares of the 500 largest U.S. companies. It's a little bit less risky than just getting stocks because you diversify your investments. Like for example, if in 2007 you were just invested in the real estate market, brat row, you lost a lot of money. But if you were invested in the real estate market and tech and makeup industry, you wouldn't have lost all your money because you have these other things to kind of soften the blow. Now the overall stock market relies on supply and demand. Basically rich people who have millions of dollars of a stock and they sell it because they're scared that it's going to fail, that makes the graph go down. And no one can truly predict the graph no matter what people say. But there's different risk levels so whether you'll lose or gain. Most importantly, do your own research and don't go based off of hype. Low risk is high yield savings and U.S. Treasury bonds. Then basically in the middle there's a mix of both, there's different ways of doing it. You can screenshot this and really get into it, but high risk, don't do it, IMO, day trading. That's basically sitting there and seeing a graph go up and down and buying and selling based off of it. So much time, so many taxes, I don't think it pays off. And another high risk thing is only investing in emerging markets like crypto, AI, startups, like penny stocks. Thanks for sticking with me, let's check back in with our girls. So the girlies are living it up in their mid 30s now. Sex in the city. Just found this pencil, let's use it. Okay, so Charli hasn't made it big, but she won't give up. She has zero dollars in debt, her 10,000 has grown to 14,000, and she's a millionaire after investing 600,000 in 10 years. So now she can retire early at 30 and now has more time to focus on her dream. Bae wants to buy a home but credit score can't get a loan. She's feeling lonely and unfulfilled. She has 125,000 in debt, 7,000 emergency fund, and zero dollars in investments. But she decides to lock in and become a frugalista, so letting go of her expensive lifestyle. Kitty is still shopping and clubbing under that YOLO mentality, diligently avoiding debt collectors. She has 100,000 in debt, still 3,000 in the emergency fund, and zero dollars in investments. Kitty's band gets internet cancelled and she gets fired. But what about that 3,000 emergency fund? Well, since it's cash, its value is now closer to 2,200 after 10 years of inflation. That's only a month and a half of her essential expenses and debt continues accruing. Last but not least, let's fast forward 30 years and the girls are now in their mid 60s. They're the Golden Girls. Charli's won five Grammys and she's going on tour with Beyonce. Obviously no debt, that emergency fund grew to 40,000 with a high yield savings, and now she has more income and investments, so her net worth is 10 million. She could retire to her mansion any time, but she still loves performing. Bae has been living mindfully, was able to purchase and pay off her dream home, and retired at 60 with her twin flame. She's got zero dollars in debt, that emergency fund grew to 20,000, and her net worth is 1.5 million. Kitty died. Just kidding. Me when I lie. Lowkey might be worse though. Kitty never locked in. After only paying the minimums for 30 years, which is 150,000 total, by the way, debt is still over half of what it was 30 years ago. She does not have enough to retire and she hates working every day for her new boss Kid Rock. Not as cool as the girl band. 65k debt, zero dollar emergency fund, 10,000 net worth. Don't be like Kitty. But overall, it's never too late to lock the F in. She could totally do that still. Also, career path doesn't matter as much as financial literacy does. Somebody could have a salary of half a million dollars and still be in debt, whereas somebody with 16k could just be smarter about it and it pays off more. Overall, start investing young, diversify your portfolio, and follow your dreams. Don't stress out too much about money, just try to be smart about it. Live life, go out, travel, find that balance, and stay mindful. Comment any questions. Thank you.