Why Broke People Should Not Invest

Unpopular opinion, but if you are broke you should not be investing. When I was broke the one thing I wanted to do was not be broke anymore, and I thought to do that I needed to start investing. But that is the last thing you should consider doing and in this video, I’ll break down why.

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1. My Definition of Being Broke
– If you spend more than you make, then you are broke
– If you have debt that’s not a mortgage you are broke
– If you don’t have an emergency account then you also broke

To be financially fit, is not just about making a 250k
– It’s about knowing that if something happens you are good
– That you don’t have a bunch of consumer debt, no matter how smart the idea sounds

Btw:
– With my definition, you have a lot of people who think they are rich or well-off
– But in reality, they are just digging a hole and writing a check they can’t cash

2. When you are broke
– The first 3 things you should do are these.

First:
– Get your budget in order
– You should not be spending more than you make; you should have money left over each month
– Simple budget: add up your shelter cost, utilities cost, groceries, transportation and health care
– Cut every single other bill out

Second:
– Use the surplus to pay off debt
– You should never have extra money and not know what to do with it or why it’s their
– If you have debt, then all the extra money should go towards paying it off
– Either by using the avalanche method or the snowball method

Third:
– Invest 10-20%
– Save for a home or pay off the one you have with the money left over

Do you know why this isn’t attractive?
– Beucase paying off debt could mean 5 years or no investing
– Paying off a home and only investing 10% could mean that it takes longer to get to your investment goal
– And I think people forget, you’ll need less money invested if your cost of living is lower

3. What at the end of this tunnel
– You probably have a rough estimate of how you spend per month

Let’s say you make $4,000 dollars a month
– You spend $800 on debt payments
– Spend $1300 on rent
– And the rest on the other stuff

If you have no debt :
– The number you spend on debt is 0
– If you have a paid-off home, you only pay insurance and taxes ( maybe $400 per month )

You see what is harder, is also a massive shortcut
– If your goal is to want freedom
– You can only have freedom by needing less money or making more money
– Needing less, meaning paying things off which takes time
– But making less, could mean working more and then having less time

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*Some of the links and other products that appear on this video are from companies in which Tommy Bryson will earn an affiliate commission or referral bonus. Tommy Bryson is part of an affiliate network and receives compensation for sending traffic to partner sites. The content in this video is accurate as of the posting date. Some of the offers mentioned may no longer be available. I’m an Accountant but I’m not your Accountant, always review information with your Accountant/CPA and your Financial Advisor.

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