November 21, 2024
How To Manage Your Money Like The 1%
 #Finance

How To Manage Your Money Like The 1% #Finance


it’s not about how much you make it’s about how you manage what you make that’s one of the key lessons I learned during my 10 years as an investment banker working with high Net Worth clients whether you’re earning 50,000 or 500,000 the strategies

used by the top 1% to grow and protect their wealth can be applied by anyone and so in this CashNews.co I’m going to reveal the 15652 system a simple proven approach that can help you manage your money like a financial expert let’s get into it starting with the most important part which

is the 15 cents that’s how much of every dollar you make that should be reserved and put aside for yourself this is where long-term security really begins and you’re doing this for two really important reasons reason One Peace of Mind imagine you’re going about your day when

suddenly you get a flat tire a surprise medical bill or an urgent family emergency happens without a solid emergency fund or a cash cushion in place you’re not just worried about the surprise that has just come up you’re now also worried about how you’re going toay pay for it and

then this can quickly derail your Finances and send you into a tail spin but not if you have that 15% cushion in place start by building a quick access solution fund enough

to cover one month of essential expenses this is your first line of defense against life’s little surprises and one month’s worth of living expenses isn’t as much as you think it might be it doesn’t include the Netflix subscriptions you have or any other discretionary

spending that you make it just covers your core costs things like your rent and mortgage groceries Transportation utility bills from there work your way up to 3 to 6 months worth of your core expenses this emergency cushion gives you the ultimate Peace of Mind knowing that if something major

happens a job loss a health scare or any other unexpected crisis you’re still covered and you won’t have to go into Debt to handle it the security of just having those 3 to six months of essential expenses saved up means you can focus on dealing with the emergency

itself rather than stressing about how to pay for it the second reason to save that 15% is to make your money work for you and you don’t need to be a finan expert to start doing this and in fact you might already be doing it without even realizing first let me show you why this is so powerful

and how to get started even if you’re a complete beginner picture two people Janet and Mike at age 30 Janet invests a lump sum of 10,000 she earns a steady 6% return each year and doesn’t touch the investment for 20 years by the time she turns 50 that initial 10,000 has grown to an

impressive 32071 without her adding a single extra dollar now let’s look at Mike Mike Waits until he’s 40 to start investing he contributes 2,000 every year for the next 10 years and it’s also earning the same 6% annual return by the time he turns 50 his 20,000 investment has

grown to 27,9 44 that’s not bad but it’s still less than Janet even though Mike invested twice as much overall the difference comes down to the power of time and compound interest Janet’s money had an extra 10 years to grow and compound and that extra decade made all of the

difference her initial 10,000 snowbo into 32,000 even without her adding a single penny this is what Einstein meant when he called compound interest the eighth wonder of the world the longer you let your money work for you the more dramatically it can multiply it’s like a runaway train with

your returns earning even more returns so where do you start you have a few options first if you’re contributing to your workplace retirement plan then you’ve already started this process the employer match is essentially free money your organization will contribute an extra dollar or

an extra pound for every dollar or pound you put in up to a certain limit so for example say you make 50,000 per year and there’s a 5% match that means for every pound or dollar you contribute up to 2,500 your employer will also contribute the same in the UK you’re automatically

enrolled into this plan but you also want to do a really important thing and that is to make sure that you are contributing enough to max out the match that is offered that’s a really great way to supercharge your Savings since your contributions are made pre-tax and the

money grows tax-free until withdrawal secondly let’s talk about tax advantaged accounts in the UK you’ve got the stocks and Shares Isa in the US it’s a Roth IRA these accounts allow your Investments to grow completely taxfree that means no

Taxes on the Dividends no Taxes on the Capital gains the government gives you these special accounts as an incentive to save and invest for the long run but bear in mind that the money you use to invest in it has already been taxed

because it comes from the money you earn from your paycheck so that is after you pay Taxes on it so again you pay tax ta at the start not at the end whereas for the workplace retirement plan we just mentioned earlier you pay tax at the end and not at the start the key is to max out

all of these tax advantage accounts first before moving on to regular tax for investment accounts now I know you might be thinking okay I know what account I need now what do I invest in the secret is to keep it super simple with passive funds this is essentially just a way to track the overall

Stock Market these funds automatically diversify your money across hundreds of different companies so you’re not putting all of your eggs in one basket and they come with super low fees which means more of your money gets to work for you once you’ve got those tax

advantage accounts set up and you’re contributing regularly you can let those passive funds do their thing no need to constantly Tinker or try to beat the market just set it and forget it it’s literally the lazy person’s path to wealth and it’s a strategy used by the

world’s most successful investors I go into a lot more detail on this in my free master class which has three more slots left for today and tomorrow we cover the differences between type of funds the common mistakes that can cost beginner thousands and how to turn just 100 a month into over a

million the link is in the description below this CashNews.co and again it’s a completely free if you want to check out before we dive into the rest of the CashNews.co I wanted to take a moment to introduce the sponsor of today’s CashNews.co and that is skillshare an online learning

platform which I’ve personally been using and benefiting from for the past two years skillshare offers thousands and thousands of high quality classes across a really wide range of creative and business related topics taught by industry experts and top Notch instructors what I personally love

most about skillshare is its commitment to making learning accessible and fun the classes are broken down into really short digestible lessons that can fit into your schedule whether you have 15 minutes or a 4 hour and with topics spanning from everything from graphic design and Entrepreneurship to

productivity hacks and personal Finance there’s really something for everyone to explore and expand their skills right now I’ve just finished and I’m

implementing the learnings from the class by Jules on how to create the ultimate Google calendar Workshop this is what I mean there’s literally a class on the most random things that you don’t even think of but will add value to your life if you want to check it out for free the first

500 people to use the link in the description will get one month of a free trial you can bin watch all the CashNews.cos you want now let’s talk about the 65 cents that’s the portion of every dollar that should go towards your fundamental expenses this is where the basics live things

like the rent or mortgage groceries utilities transportation and any other musthaves that keep life running smoothly and this is the trickiest part because these expenses have a sneaky way of ballooning out of control but you know how it goes you get a raise and suddenly that old apartment feels

too small or you decide to upgrade your car and what seems like progress can actually backfire when those upgrades come with higher rent and maintenance or Insurance cost your expenses will grow to match your Income unless you fight them off and that’s where

setting a firm limit on your fundamental expenses makes all the difference the 65% cap keeps your core expenses in check so that you aren’t scr scambling just to cover the basics and I’m not going to lie this is in many cases harder said than done especially if you’re living in an

expensive city and according to the office for National statistics housing is the largest spending category representing about 19% of the total weekly expenditure so that includes things like rent or mortgage interest payments and utility bills and the second largest category is transportation

which makes up approximately 14% of household spending and that includes things like vehicle purchases maintenance Fuel and public transport have a look at your own spending write down what your biggest spending categories are once you know where your money is currently going you can then look for

ways to optimize the biggest costs can you negotiate a better deal on your rent can you swap that daily commute for a more affordable option it’s not about cutting out the little joys in life it’s about finding ways to keep the big unavoidable costs under control giving your budget more

breathing space for the fun things in life and that last 20 cents is where that fund begins in the book Di the author Shares a really powerful idea which I absolutely love and it’s that the ultimate goal isn’t to die with a massive bank account but to use your money to

create a rich and a fulfilling life and the 1% know the secret they intentionally make room in their budgets for guilt-free enjoyment and so should you because all work and no play is a Sure Fire path to burnout and studies show that people who give themselves a little flexibility in their budgets

are far more likely to stick to their financial goals over the long call it’s kind of like going on a strict diet if you never allow yourself a cheap meal eventually you’re going to break and binge that same principle applies to money now you might be thinking won’t that derail my

Savings and Investments not at all in fact probably the opposite if you don’t carve out a portion for guilt-free spending you’re much more likely to overspend down the road or even worse give up on your Savings and

Investments entirely that’s why the 15652 rule recommends using 20% of your Income for fun enjoyment and personal fulfillment in fact you could even reframe this 20% as an investment in yourself by making sure you stay motivated balanced and energized

you’re actually increasing the odds of sticking to your long-term Financial plans so in practice this can mean treating yourself out to an exceptionally nice dinner once a month or finally pulling that trigger on a new bag that you’ve been eyeing or even planning a really fun getting

away with friends the key is to give yourself permission to enjoy 20% of your Income without feelings of guilt or shame so those are my top tips on managing your money like the 1% the 15 65 20 Ru if you found this CashNews.co useful I’d appreciate if you could take a second

to subscribe to the channel thank you and see you next week

Now that you’re fully informed, check out this insightful video on How To Manage Your Money Like The 1%.
With over 458685 views, this video offers valuable insights into Finance.

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46 thoughts on “How To Manage Your Money Like The 1% #Finance

  1. Well, don't forget about tax manipulation, strategic use of debt, and legally protected entities. I think these are probably the most important way that the rich use to manage money. Everything else is just basic budgeting.

  2. Oh geez another one of these investment guides. This really only works if you have money to save every paycheck. not that the economy sucks and your pay triple for groceries, double for utilities, and double for insurances all the while not getting any pay increases. Great advice for people who have extra money to save.

  3. I like the idea of this strategy and that it suits any income. But where do costs associated with children fall? Clothes, schooling etc obviously in the 65% but what about their leisure costs? Do they come out of my (our) 20%? Or is there a different ratio strategy? Maybe I (we) should allocate them some money (from my (our) 65%) and apply the same rule to help them manage money early?

  4. thats very interesting

    im curious. where would you put some health stuff like seeing a chiropractor or psychologist ? in the invest in yourself part or fundamentals expense 🤔

  5. I’ve been saving for a long time instead of investing, and right now I only have about $516k. I'm not sure how to make it grow, considering all the inflation, into something substantial that I might use for retirement. I’m just here for ideas

  6. The key thing to remember is not to start taking your finances seriously when you reach 50. Saving a small amount starting at an early age is a good habit to get into. Also try to avoid copying others around you and how they appear to be spending their money. That is a recipe for disaster for certain.

  7. According to our religion compound interest is a sin. Allah forbid but what will happen if you get cancer and you've to spend all your money on your health where your funds then?

  8. Assuming 6% in ‘safe investments’ is just not a sensible measure. I’ve been in various investments for years, from safe index trackers, through to high risk equity only international funds …. 6% just doesn’t happen (across 50+ fund managers also to avoid single manager risk)

    Currently at 3.8% YTD and 1% over last 5 years.

    Investments do not compound over time like these people claim.

  9. VERY INTERESTING VIDEO – Thank you for this service

    Unfortunately the costs are way off in 2024 UK
    Rent in 2004 = £ 800 pcm
    Rent in 2024 = £1979 pcm

    In DEC2017 the electric and gas went out of this world from £170 pcm to £342 pcm (Gas and Electric)
    OFCOM always sides with the utility provider and not one organisation, GOVT or person will stop these parasitic companies
    bleeding UK customers dry. We cant use less ELECTRIC but we have turned off the central heating.

    RENT & UTILITIES WIPE OUT MY WAGES EVERY SINGLE MONTH
    EVERY DAY IS LIKE SURVIVAL
    WITH NO LIGHT AT THE END OF THE TUNNEL

    Wish my wages would rise enough to afford a life
    Need to break the cycle

    Everyone will become nomadic with the cost of living
    Maybe the Gypsies have got it right after all

    Buy an Electric RV and a plot of land and live

  10. Well thats only if the market keeps groing. It's more likely that we will get a huge drop somewhere in the next 5 years. Stockmarket is overextended. If you don't pick single stocks now, you will be invested in the very top of the market where it can only go down. far. Risky.

  11. I like how the 50/20/30 rule has now become 65/15/20 because of inflation due to corporate greed. In less than a decade, i know financial youtubers will be making a 80/15/5 rule. 😂

  12. Been doing this for about 2 years now. The system is good, feels comfortable. The UK has become very expensive over the past years though , anything from rent, food, energy to parking, cafes, pubs. I know my friends working in hospitality that back in 2008 could go out, now they can’t anymore.

  13. It's amazing how history keeps repeating itself, and the urgency to prepare is definitely real, Investing can be the best decision of your financial life. I started my journey in 2021, and it has been the best choice I have made for my finances.

  14. I asked chatgpt about Einstein's 8th wonder quote: "It’s often attributed to Einstein, but there’s no verified record of him saying, “Compound interest is the eighth wonder of the world.” The saying likely comes from a misattribution or popular financial lore, as many people credit him with statements about the power of compound interest to highlight its impact on wealth building over time."

  15. Frugality lets you maintain a balance where only your priorities come first , leading you to a secure financial future. I am avoiding debt , saving and investing around 40 percent of my income. I have a high paying engineering job, and I live upstate MN. since covid my expenses are extremely low. I have zero debt on a 7 figure portfolio, low rent and car paid off. So i can just save. feel lucky and grateful my fiduciary came into play.

  16. THIS IS SO IMPORTANT TO START FROM DAY ONE BIT GUYS IT IS A LOT ABOUT HOW MUCH YOU MAKE, YOU CANT SAVE NOTHING, FOCUS ON MAKING AS MUCH MONEY AS POSSIBLE FIRST AS WELL AS DOING THIS

  17. You really have to make it into the lower middle class (which may well be easier in the UK than the US, especially with healthcare not being bankruptcy waiting to happen over there) before any of this is relevant. Can't save if you can barely keep up with rent, which is more often a matter of rents rising than lifestyle creep at this point. Perfectly sound middle class advice though.

  18. I've experimented with a few over the past years, but I've stuck with ‘’SHARON CRUMP CLINE” for about five years now, and her performance has been consistently impressive.

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