March 6, 2025 • 11 mins
Today, we’re diving into something that could change your financial life: financial literacy. You’ve probably been doing it wrong this whole time, and we’re here to fix that! We’re exploring five crucial aspects of financial literacy—things you should’ve learned in school. Let’s get comfy because we’re about to fill your pockets.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
Welcome to another episode of The Wealth
(00:02):
Effect, where we break down money,
life, and why most of us
don't have YouTube premium.
I'm your host, Green Moon, and today we're
talking about something that could save
your financial
life.
It's called
financial literacy.
And why you've probably been
doing it wrong this whole time.
We're diving into one of the most valuable
(00:23):
yet neglected subjects in our life,
financial literacy.
It's been said money isn't everything,
but let me tell you something.
When you don't have it, it
affects everything in your life.
It's wild.
We go through school learning things like
mitochondria being the
powerhouse of the cell.
(00:44):
But no one ever bothers to
tell us how to do our taxes.
Or why getting a payday loan is
probably the worst idea of your life.
But don't worry, I'm
here to fix that.
So get comfy.
We're going to go over five financial
literacy ideas that you should have
learned in school.
We will touch briefly
on each topic.
(01:04):
And each topic will get its
own in-depth video later.
Let's fill
your pocket.
Understanding money.
First things first, what does
financial literacy even mean?
Simply put it, it's the knowledge
and understanding of how money works.
Knowing that money is earned, spent,
and ideally saved and invested.
(01:27):
Financial literacy is important because
it empowers you to make informed decisions
about your money.
And it's never too
late to start learning.
We all start
somewhere.
If you don't know what money is, or
how it works, the public school system
failed you.
Money isn't just a green piece of paper,
(01:48):
or colorful if you live outside the US.
It's a tool, just
like your phone.
Because if you don't understand money,
it will control you, instead of the other
way around.
Most people spend their whole lives
working for money, but never learn how to
make money
work for them.
I once heard a great line, If you don't
(02:09):
understand money, you'll spend your life
working for
someone who does.
Let that sink in.
Look at any
wealthy person.
You'll notice they all
share something in common.
They understand
money.
They study it.
And they make conscious
(02:30):
choices with it.
Now, here's
the secret.
Every person started
where you are.
Broke, confused, and
maybe even scared.
The difference?
They learn the
rules of the game.
And today, you'll get a
brief overview of them.
Financial literacy
is about freedom.
Money is a tool,
(02:50):
not a trophy.
The first thing you need to understand
about money is that it's a tool,
not a trophy.
But based on the way some of you treat
it, you think it was a golden ticket to
endless happiness and an
Instagram-worthy lifestyle.
Money is not about buying the latest
gadgets or filling your closet with enough
(03:11):
designer clothes to make
your friends jealous.
If you're out there flexing on social
media, showing off the latest watch you
probably can't afford,
you're doing it wrong.
Money is supposed to work for
you and not the other way around.
When money is a trophy, it can lead to
stress, competition, and even isolation.
You'll start to measure your worth by your
(03:32):
balance in your bank account or how many
possessions you
can show off.
And when money is the thing you're
chasing, it can leave you feeling empty
because money can't give you true
fulfillment no matter
how much you collect.
The goal is to use money to create
something, to create a home, a lifestyle
where you can thrive
and others as well.
(03:54):
Budgeting.
Not as horrible
as you think.
Budgeting is telling your
money where to go next.
Budgeting is for people who want to stop
living paycheck to paycheck and have
enough left over to buy something
healthier than a burger.
Budgeting doesn't mean you can't have
fun or buy a $5 coffee now and then.
(04:14):
It just means you're not living your life
in complete chaos while your bank account
side-eyes you.
Do you want financial
independence?
See our Pocket Buy episode on
Intro to Financial Independence.
You need to know
where your money goes.
This doesn't mean
cutting out all the fun.
It's just about prioritizing your expenses
(04:36):
so you're not buying the new iPhone every
time it drops.
Budgeting is the eat
your veggies of finance.
But here's
the thing.
If you don't budget, you're just
hoping your money magically works out.
It won't.
Having a budget is basically
like having a map for your money.
Track your income, track your spending,
(04:57):
and make sure your future
self doesn't hate you.
And no, just looking at your bank account
balance doesn't count as budgeting.
You wouldn't build a house by just
staring at a blueprint, would you?
Real budgeting is about setting limits,
making priorities, and making sure you're
not blowing all
of your cash.
There are different methods of budgeting,
(05:19):
such as zero-based budgeting, where you
allocate every dollar to a specific item,
the envelope system, where you divide up
cash into different envelopes,
representing different categories of
expenses, the 80-20 rule, where you save
20% of your income and use the other 80%
for your expenses, the 50-30-20 rule,
(05:43):
where 50% of your income goes to needs
like rent, food, and bills, 30% of it goes
to wants, so anything you want for fun or
shopping, 20% for saving and investing,
and we will go in-depth on each one of
these in future
episodes.
Before you start investing,
have a safety net.
(06:03):
An emergency fund of 3-6 months of
expenses can keep you out of debt when
life is crumbling.
Debt.
The invisible hand.
Let's talk about the invisible hand
that ruins your financial life.
Debt.
So you've got student loans, credit cards,
and maybe that one loan you took out to
invest in that MLM scheme some old
(06:25):
high school classmate recommended.
Debt is the thing that keeps
you from moving forward.
And by moving forward, I mean buying
stuff that actually improves your life,
not just junk you think you need
because someone on Instagram said so.
An important topic of financial literacy
is understanding your debt, especially the
(06:48):
high-interest kind.
Debt can keep you wondering and worried
about your future if you don't really
understand it or any strategies to
pay it off as cheaply as possible.
There is also good debt, such as mortgages
or money borrowed to invest to build
wealth long-term.
But the bad debt is credit card loans,
(07:09):
car loans, payday loans, or others.
Debt is not your fund money
or your ticket to freedom.
It's a trap.
Check out our Pocket
Buy episode on debt.
Debt can be a
tool or a trap.
It all depends on
how you use it.
Credit cards aren't evil, but paying 5%
interest on a $5 chocolate
is a terrible idea.
(07:30):
Use credit cards
responsibly.
Pay it off in
full every month.
Avoid high
interest debts.
Build your
credit score.
It can save you thousands
on loans and mortgages.
How to keep your
credit score high.
Always pay off
your balance.
Keep your utilization below
30% of your total credit.
Never miss a payment as that's one of the
(07:51):
biggest factors in
determining your credit score.
Debt doesn't have
to ruin your life.
But if you ignore it, it'll
absolutely ruin everything.
Investing.
Money that
makes money.
Let's get to
the fun stuff.
Investing.
You know that thing that you think you
can't do because your only experience with
stock is buying that one share
(08:11):
of Apple a few years ago?
Investing is
not gambling.
It's a long-term game where
you make money work for you.
The wealthy
don't just save.
They grow
their money.
Why should you even
bother investing?
You could just keep your money
in a savings account, right?
Well, here's
the thing.
While saving is important, it doesn't help
(08:32):
your money grow at a pace where it will
keep up with inflation or
your growing lifestyle.
You don't just have to throw money at
the shiny thing you hear
about on the internet.
No, you actually need to learn about
the stock market, real estate, bonds,
and all the boring stuff that will make
you rich without having to
(08:52):
sell your soul to TikTok.
You can't just buy one
stock and pray for the best.
You need to diversify your portfolio
like you diversify your meals.
Start small, do your
homework, and think long-term.
You're not getting rich overnight by
betting it all on one tech stock because
some YouTube
guru told you so.
(09:13):
Building wealth is
not a one-time thing.
The last thing for today about financial
literacy is that building wealth isn't
some magic trick you
do on the weekend.
It's a process,
like a long process.
You don't just wake up one day and find
a million dollars in your bank account
because you watched
one motivational video.
That's not
(09:33):
how it works.
Building wealth takes discipline,
practice, and consistency.
That means you have to
regularly save and invest.
You want to get ahead, set goals,
track progress, and
actually follow through.
You can't just hope
to build wealth.
You have to
work towards it.
(09:54):
Stop thinking about all the
get-rich-quick stuff you see online.
Real wealth is built doing a lot
of little things right each day.
It's about making smart moves over time,
not wild, impulse decisions every weekend.
If you think you're going to get rich by
cashing in on one big move, you should be
(10:14):
ready to cry
yourself to sleep.
Understanding financial literacy
starts with a shift in mindset.
Money is not just
something you spend.
It's something
you use.
The financially successful don't
just think about what they can buy.
They think about
what they can build.
So here's the recap.
(10:35):
Financial literacy is about understanding
money, budgeting, avoiding debt,
investing, and actually
building wealth.
It's just not
fast, but it works.
And it's the only way you're finally going
to stop stressing about where your next
paycheck is
coming from.
If you actually want to make it in
(10:55):
this world, try learning the basics of
financial literacy.
It might just change your life or at least
stop you from crying each time you check
your bank account.
Financial literacy is about understanding
that money is a tool and you need to learn
to use it at its
full capacity.
Thanks for tuning in
(11:16):
to The Wealth Effect.
Don't forget to like, subscribe,
and tell your friends.
Stay tuned for future episodes where we go
in-depth on each one of these topics and
explore them
a bit more.
Welcome to another episode of The Wealth
(00:02):
Effect, where we break down money,
life, and why most of us
don't have YouTube premium.
I'm your host, Green Moon, and today we're
talking about something that could save
your financial
life.
It's called
financial literacy.
And why you've probably been
doing it wrong this whole time.
We're diving into one of the most valuable
(00:23):
yet neglected subjects in our life,
financial literacy.
It's been said money isn't everything,
but let me tell you something.
When you don't have it, it
affects everything in your life.
It's wild.
We go through school learning things like
mitochondria being the
powerhouse of the cell.
(00:44):
But no one ever bothers to
tell us how to do our taxes.
Or why getting a payday loan is
probably the worst idea of your life.
But don't worry, I'm
here to fix that.
So get comfy.
We're going to go over five financial
literacy ideas that you should have
learned in school.
We will touch briefly
on each topic.
(01:04):
And each topic will get its
own in-depth video later.
Let's fill
your pocket.
Understanding money.
First things first, what does
financial literacy even mean?
Simply put it, it's the knowledge
and understanding of how money works.
Knowing that money is earned, spent,
and ideally saved and invested.
(01:27):
Financial literacy is important because
it empowers you to make informed decisions
about your money.
And it's never too
late to start learning.
We all start
somewhere.
If you don't know what money is, or
how it works, the public school system
failed you.
Money isn't just a green piece of paper,
(01:48):
or colorful if you live outside the US.
It's a tool, just
like your phone.
Because if you don't understand money,
it will control you, instead of the other
way around.
Most people spend their whole lives
working for money, but never learn how to
make money
work for them.
I once heard a great line, If you don't
(02:09):
understand money, you'll spend your life
working for
someone who does.
Let that sink in.
Look at any
wealthy person.
You'll notice they all
share something in common.
They understand
money.
They study it.
And they make conscious
(02:30):
choices with it.
Now, here's
the secret.
Every person started
where you are.
Broke, confused, and
maybe even scared.
The difference?
They learn the
rules of the game.
And today, you'll get a
brief overview of them.
Financial literacy
is about freedom.
Money is a tool,
(02:50):
not a trophy.
The first thing you need to understand
about money is that it's a tool,
not a trophy.
But based on the way some of you treat
it, you think it was a golden ticket to
endless happiness and an
Instagram-worthy lifestyle.
Money is not about buying the latest
gadgets or filling your closet with enough
(03:11):
designer clothes to make
your friends jealous.
If you're out there flexing on social
media, showing off the latest watch you
probably can't afford,
you're doing it wrong.
Money is supposed to work for
you and not the other way around.
When money is a trophy, it can lead to
stress, competition, and even isolation.
You'll start to measure your worth by your
(03:32):
balance in your bank account or how many
possessions you
can show off.
And when money is the thing you're
chasing, it can leave you feeling empty
because money can't give you true
fulfillment no matter
how much you collect.
The goal is to use money to create
something, to create a home, a lifestyle
where you can thrive
and others as well.
(03:54):
Budgeting.
Not as horrible
as you think.
Budgeting is telling your
money where to go next.
Budgeting is for people who want to stop
living paycheck to paycheck and have
enough left over to buy something
healthier than a burger.
Budgeting doesn't mean you can't have
fun or buy a $5 coffee now and then.
(04:14):
It just means you're not living your life
in complete chaos while your bank account
side-eyes you.
Do you want financial
independence?
See our Pocket Buy episode on
Intro to Financial Independence.
You need to know
where your money goes.
This doesn't mean
cutting out all the fun.
It's just about prioritizing your expenses
(04:36):
so you're not buying the new iPhone every
time it drops.
Budgeting is the eat
your veggies of finance.
But here's
the thing.
If you don't budget, you're just
hoping your money magically works out.
It won't.
Having a budget is basically
like having a map for your money.
Track your income, track your spending,
(04:57):
and make sure your future
self doesn't hate you.
And no, just looking at your bank account
balance doesn't count as budgeting.
You wouldn't build a house by just
staring at a blueprint, would you?
Real budgeting is about setting limits,
making priorities, and making sure you're
not blowing all
of your cash.
There are different methods of budgeting,
(05:19):
such as zero-based budgeting, where you
allocate every dollar to a specific item,
the envelope system, where you divide up
cash into different envelopes,
representing different categories of
expenses, the 80-20 rule, where you save
20% of your income and use the other 80%
for your expenses, the 50-30-20 rule,
(05:43):
where 50% of your income goes to needs
like rent, food, and bills, 30% of it goes
to wants, so anything you want for fun or
shopping, 20% for saving and investing,
and we will go in-depth on each one of
these in future
episodes.
Before you start investing,
have a safety net.
(06:03):
An emergency fund of 3-6 months of
expenses can keep you out of debt when
life is crumbling.
Debt.
The invisible hand.
Let's talk about the invisible hand
that ruins your financial life.
Debt.
So you've got student loans, credit cards,
and maybe that one loan you took out to
invest in that MLM scheme some old
(06:25):
high school classmate recommended.
Debt is the thing that keeps
you from moving forward.
And by moving forward, I mean buying
stuff that actually improves your life,
not just junk you think you need
because someone on Instagram said so.
An important topic of financial literacy
is understanding your debt, especially the
(06:48):
high-interest kind.
Debt can keep you wondering and worried
about your future if you don't really
understand it or any strategies to
pay it off as cheaply as possible.
There is also good debt, such as mortgages
or money borrowed to invest to build
wealth long-term.
But the bad debt is credit card loans,
(07:09):
car loans, payday loans, or others.
Debt is not your fund money
or your ticket to freedom.
It's a trap.
Check out our Pocket
Buy episode on debt.
Debt can be a
tool or a trap.
It all depends on
how you use it.
Credit cards aren't evil, but paying 5%
interest on a $5 chocolate
is a terrible idea.
(07:30):
Use credit cards
responsibly.
Pay it off in
full every month.
Avoid high
interest debts.
Build your
credit score.
It can save you thousands
on loans and mortgages.
How to keep your
credit score high.
Always pay off
your balance.
Keep your utilization below
30% of your total credit.
Never miss a payment as that's one of the
(07:51):
biggest factors in
determining your credit score.
Debt doesn't have
to ruin your life.
But if you ignore it, it'll
absolutely ruin everything.
Investing.
Money that
makes money.
Let's get to
the fun stuff.
Investing.
You know that thing that you think you
can't do because your only experience with
stock is buying that one share
(08:11):
of Apple a few years ago?
Investing is
not gambling.
It's a long-term game where
you make money work for you.
The wealthy
don't just save.
They grow
their money.
Why should you even
bother investing?
You could just keep your money
in a savings account, right?
Well, here's
the thing.
While saving is important, it doesn't help
(08:32):
your money grow at a pace where it will
keep up with inflation or
your growing lifestyle.
You don't just have to throw money at
the shiny thing you hear
about on the internet.
No, you actually need to learn about
the stock market, real estate, bonds,
and all the boring stuff that will make
you rich without having to
(08:52):
sell your soul to TikTok.
You can't just buy one
stock and pray for the best.
You need to diversify your portfolio
like you diversify your meals.
Start small, do your
homework, and think long-term.
You're not getting rich overnight by
betting it all on one tech stock because
some YouTube
guru told you so.
(09:13):
Building wealth is
not a one-time thing.
The last thing for today about financial
literacy is that building wealth isn't
some magic trick you
do on the weekend.
It's a process,
like a long process.
You don't just wake up one day and find
a million dollars in your bank account
because you watched
one motivational video.
That's not
(09:33):
how it works.
Building wealth takes discipline,
practice, and consistency.
That means you have to
regularly save and invest.
You want to get ahead, set goals,
track progress, and
actually follow through.
You can't just hope
to build wealth.
You have to
work towards it.
(09:54):
Stop thinking about all the
get-rich-quick stuff you see online.
Real wealth is built doing a lot
of little things right each day.
It's about making smart moves over time,
not wild, impulse decisions every weekend.
If you think you're going to get rich by
cashing in on one big move, you should be
(10:14):
ready to cry
yourself to sleep.
Understanding financial literacy
starts with a shift in mindset.
Money is not just
something you spend.
It's something
you use.
The financially successful don't
just think about what they can buy.
They think about
what they can build.
So here's the recap.
(10:35):
Financial literacy is about understanding
money, budgeting, avoiding debt,
investing, and actually
building wealth.
It's just not
fast, but it works.
And it's the only way you're finally going
to stop stressing about where your next
paycheck is
coming from.
If you actually want to make it in
(10:55):
this world, try learning the basics of
financial literacy.
It might just change your life or at least
stop you from crying each time you check
your bank account.
Financial literacy is about understanding
that money is a tool and you need to learn
to use it at its
full capacity.
Thanks for tuning in
(11:16):
to The Wealth Effect.
Don't forget to like, subscribe,
and tell your friends.
Stay tuned for future episodes where we go
in-depth on each one of these topics and
explore them
a bit more.
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