Money experts Jaspreet Singh and Rachel Cruze are known for giving their viewers helpful personal finance tips, but they don’t always agree.
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In a video on his YouTube channel Minority Mindset, Singh outlined his five recommendations for what to do when your savings reach $1,000. In response, Cruze made a video reacting to and discussing Singh’s tips and adding her own insights.
Read on to see if these two experts agree on the best use of $1,000.
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What does Jaspreet Singh say?
Once you’ve saved $1,000, Singh suggests using the money for the following five “upgrades” to build your wealth.
Expand your knowledge
First, Singh said one should invest in one’s education – and in oneself – by reading 25 books on money management, investing and economics. According to him, one can get an MBA-level education by reading books without paying the MBA price.
Cruze agreed that one can gain a lot of knowledge about finances by reading. Finally, Singh recommended Dave Ramsey’s book, The Total Money Makeover, and Cruze is one of the financial experts at Ramsey Solutions.
However, Cruze also explained that personal finance is 80% behavior and 20% knowledge, and that your actions will improve your financial situation far more than knowledge.
Improve your financial goals
Singh also advises reviewing your financial goals and considering whether you are limiting them too much.
“If you believe it is possible to build something bigger, you will work to build something bigger,” Singh added.
As someone who helps people get out of debt and gain control of their money, Cruze definitely agreed with the value of setting financial goals. She said having some financial goals is “the fuel for how the reality of your money actually plays out.”
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Increase the value of your investments
After reviewing your financial goals, Singh recommends reducing your expenses and increasing your income so you have more to invest.
He said that people who build real wealth don’t make money to spend; they make money to invest because “your investments will make you rich.” Singh noted that while spending less often means sacrifice, investing it now allows you to spend more later.
Cruze Singh also agreed in this case, emphasizing that wealthy people earn passive income through investments and “make money while they sleep.”
However, Cruze advises that you wait to prioritize investments until you are debt-free—except for your mortgage—and have a well-filled emergency fund.
Add value to your time
Singh wants you to realize the value of time and the cost of wasting it. To make better use of your time, Singh suggests canceling a subscription like Netflix for six months to a year and using the extra time to read books, watch educational videos or work on something that can increase your income.
Cruze agreed that there are financial benefits to having a side job and earning extra money, especially for those who are in a “time of sacrifice” while paying off debt or saving for a big financial goal.
However, she said that working too many hours per week was unrealistic in the long run, especially if finances were good.
Improve your cash flow
Singh’s final recommendation after you’ve saved $1,000 is to invest your money in things that can generate cash flow, rather than just focusing on retirement accounts where you won’t see the money for years to come.
Singh prefers passive, dividend-paying, long-term investments such as index funds and real estate. He also invests personally in other companies.
Cruze also recommends investing beyond your retirement account, but advises against individual stock investments. However, if you’ve paid off your debt, emergency fund and retirement account, Cruze says it’s OK to spend some of your money, too.
What does Rachel Cruze say?
While Cruze agreed with most of Singh’s advice, he recommended a different path to building wealth once you’ve saved $1,000, outlining Ramsey Solutions’ seven small steps to gain control of your money.
The first step is to build a $1,000 emergency fund to cover your expenses while you work on the second small step, paying off your debt.
Once you’ve paid off your debt, you can move on to Ramsey’s other small steps, which include building a three- to six-month emergency fund, investing for retirement, saving for your children’s college education, and paying off your mortgage.
Only after you have completed these steps does Cruze recommend that you focus on the seventh small step: building wealth.
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This article originally appeared on GOBankingRates.com: 5 Things to Do with $1,000: Rachel Cruze vs. Jaspreet Singh
