The 50-30-20 budget rule suggests allocating 5-10% of your take-home pay for hobbies and recreational spending. For example, if you bring home $3,500 per month (after taxes), you should plan to spend between $175 and $350 per month on hobbies. This is a broad range, and the magic number is 10 percent of your monthly net pay. To achieve this, allocate a percentage of your income to fun money, such as vacations, dining out, hobbies, and gym expenses.
The 50/30/20 calculator divides your take-home income into three categories: 50 for needs, 30 for wants, and 20 for savings and debt repayment. A $100 budget a month is reasonable for a hobby, but you might want to raise that budget if you plan to include going out to drinking or eating and vacations. Most experts agree that spending 10% of your overall income on hobbies is a healthy figure if you are financially stable. If you can save 30-40% of your income even with 20 dedicated to hobbies, have fun!
The amount people spend on hobbies varies widely, but studies suggest that individuals may allocate around 5-10% of their income to leisure. The general accepted rule of thumb is to max out any hobby budget at 5-10% of your take-home pay, depending on how much of your income you can save or invest. You can also adjust the amount by setting aside cash for hobbies.
To determine the appropriate percentage to spend on hobbies, take a honest look at your current income, expenses, debt, and hobby spending. Americans on average spent $3,458 on entertainment in 2022, according to data from the U.S. Bureau of Labor Statistics.
📹 How Much “Fun Money” Am I Allowed to Budget?
Explore More Shows from Ramsey Network: 🎙️ The Ramsey Show ⮕ https://ter.li/ng9950 Smart Money Happy Hour …
What is a good percentage of income to spend?
It is recommended that a budget be established for net income, with the following allocations: 50 dollars for living expenses and essentials (needs), 20 dollars for debt reduction and savings (debt reduction and savings), and 30 dollars for discretionary spending (wants).
What is the average cost of hobbies per month?
In 2022, the average American consumer spent $908 on entertainment items like pets, toys, hobbies, and playground equipment, averaging around $75. 67 per month. Entertainment is a popular online activity, with products related to it ranking among the top digital expenses of Gen Z shoppers and millennials. The average entertainment cost per month from 2021-2023 is similar to other countries, indicating a significant increase in spending on entertainment.
What is the 50 30 20 rule of money?
The 50-30-20 rule is a budgeting strategy that outlines how to allocate your after-tax income into spending categories. It focuses on 50 of your income towards necessities, 30 on non-need items, and the final 20 on debt reduction or savings. This rule is not a strict budgeting rule, but rather a general guideline to help you think about how to allocate your paychecks. However, understanding your personal budget realities is more important than hitting the 50-30-20 rule with precision.
What is the 70 20 10 rule?
The 70/20/10 rule is a budgeting approach that suggests setting aside 70% of your income for living expenses and discretionary purchases, 20% for savings and investments, and 10% for debt repayment or donations. This simple method helps manage money but should be adjusted to fit individual needs. Affiliate links for products on this page are from partners that compensate the author, and terms apply to offers listed.
However, the rule doesn’t separate essential and nonessential expenses. Despite its limitations, the 70/20/10 rule is a useful tool for gaining control over income and managing expenses. It’s a simple yet effective way to manage money effectively.
What is a good spend to income ratio?
The 50-30-20 budget rule is a financial management tool that suggests that individuals should allocate up to 50% of their after-tax income to meet their needs and obligations. The remaining half should be allocated to savings, leaving 30 for non-necessary items. This rule was popularized by U. S. Sen. Elizabeth Warren in her book “All Your Worth: The Ultimate Lifetime Money Plan”. It aims to balance the need for necessities with the need for emergencies and retirement.
To implement this rule, individuals can set up automatic deposits, use automatic payments, and track income changes. This simple and effective approach can help individuals create a budget that can be easily adhered to over time to achieve their financial goals.
What percentage of income should be fun money?
To maintain a budget and avoid spending excessively, it’s essential to set aside a portion of your income for fun. By following the 50/30/20 rule, you can allocate 30 of your income for fun, with 50 for needs, 30 for wants, and 20 for savings. This money management strategy allows you to enjoy some of your money now while saving for the future. To maximize your fun money, prioritize spending on things that matter to you.
What is the 70 20 10 Rule money?
The 70-20-10 budget formula divides after-tax income into three categories: 70 for living expenses, 20 for savings and debt, and 10 for additional savings and donations. This helps manage money daily and achieve financial goals in the short and long term. To establish a budget, consider finding the right banking partner. SoFi Checking and Savings offers a competitive annual percentage yield (APY), zero account fees, and rewards like access to the Allpoint Network of 55, 000+ fee-free ATMs. Qualifying accounts can access their paycheck up to two days early.
How much of your salary should you spend on hobbies?
The general guideline for allocating funds towards hobbies is 5 percent of one’s net monthly income. However, the precise amount may vary depending on individual circumstances and could potentially be adjusted upwards or downwards.
What is the 40-40-20 budget rule?
The 40/40/20 budget rule is a structured and flexible method for managing income and expenditures. It categorizes after-tax income into three main groups: essentials, financial goals, and discretionary spending. The first 40 percent of income is allocated to essential expenses, such as rent, utilities, groceries, insurance, and transportation. The remaining 40 percent is allocated to financial goals, such as debt repayment, emergency fund savings, and retirement investments.
This segment is crucial for those looking to effectively manage debt. The remaining 20 percent is reserved for discretionary spending, such as entertainment, hobbies, and dining out. This allows for flexibility and personal choice, making the budget sustainable and realistic. To use the 40/40/20 budget, follow these four steps: manage essential expenses effectively, work towards financial goals, and enjoy the fruits of your labor.
Is it okay to have expensive hobbies?
Hobbies can help balance stress and provide a sense of balance, but if they become too expensive, it can add more stress than it’s worth. It’s crucial to prioritize your finances and consider how to use extra funds. Ben Walker, a credit cards specialist, has leveraged credit card points and miles to travel the world and has expertise in loans, insurance, investing, and real estate. His insights can be found on The Washington Post, Debt. com, Yahoo! Finance, and Fox Business.
What is the 60 20 20 rule?
The 60/20/20 budget rule is a budgeting method designed for individuals who prioritize savings, debt management, and long-term financial aspirations. It involves dividing your income after taxes into three parts: 60 for essential living costs (including debts), 20 for wants, and 20 for savings. The majority of this income is allocated to these non-negotiables, such as housing, food, electricity, water, and healthcare costs. Once you’ve paid off your debt, consider revising your budget to allocate the extra 10 towards savings.
This strategy is particularly useful for those aiming to prioritize savings, debt management, and work towards their long-term financial aspirations. By following this rule, you can effectively manage your money and achieve your financial goals.
📹 ACCOUNTANT EXPLAINS: Money Habits Keeping You Poor
Most of what we do with our money everyday is unconscious. In this video I share the most common bad money habits and how …
I grew up always being warned by my parents “live below your means”. In other words, rather than buying whatever you CAN afford, instead buy items at price points a little bit lower than that. So if you can afford a $500,000 house, aim for one at $400,000 or $300,000. If you can afford a brand new $30,000 car, buy something cheaper like a $20,000 or a used vehicle. It means they you can still live a great life but you will never be stretching yourself thin and can actually build savings and invest in your future.
Those tips are helpful, but the most helpful tip is to being born in a wealthy family. Many many people are not poor because of their own bad behaviour but because it is difficult to escape the system. Having financial problems atm myself, I don’t see how to safe 3-6 months of expenses if my income barely covers my costs
YES YES YES, a article on taxes would be amazing. And any advice on where people can start educating and reading about it themselves 🙏Knowing how to legally reduce your taxes is soooo important. And obviously this information isn’t lying around to be acquired easily. I myself have studied economics and it just baffles me that a lot of practical basic economics stuff isn’t taught to everyone. I have recently started a side hustle with great potential and I have seen the growth and possibilities, so naturally I started expanding my knowledge about how to keep investing and keeping as much of the money I’m making. It takes a while to get a complete picture of everything you need to keep track of and to make it part of our lives. But when you do, the results are amazing. Keep up the good work.
Breaking bad money habits and investing wisely reminds me of the time I made a conscious effort to save $200 a week for 14 years. It wasn’t easy, but staying persistent paid off, and I eventually watched my savings grow to $3M through investing. Seeing those small steps turn into something significant has been incredibly fulfilling.
1. Pay yourself first 2. Get comfortable to buy bad debt 3. Not having a stockpile. 3-6 months living expense. 4. Not knowing how much is your income & other expenditure 5. Expensive hobbies 6. Focus purely on savings. Explore how to make more money 7. Pay too much taxes. How can u legally reduce your taxes 8. Waiting too long to invest. Dont put all in savings bank
Without a doubt, this year will be worse than the last. I lost a lot of money last year as a result of bad investment choices that I would not have made if I hadn’t been so worried about my portfolio. I kept investing, but I couldn’t determine whether to start paying for a house. In the end, I sold my positions, and the house needed more work than I had planned. I’m not sure how long I can keep going like this
My dad came to the US when he was five and he did really smart investing when the market crash 2009. Im 26 and i feel so lost but i don’t want to have a corporate job i worked during the pandemic . i stayed in this job and quit when i didn’t see any promotions 4 years and it was frowned upon to quit .Now it’s the new thing to keep moving your job if their wasn’t potential.
I have been a dividend focused investor for a long time. This does not mean I don’t own growth stocks, I do. A well rounded portfolio should be a mixture of both categories. One way to minimize the anxiety out of stock market investing, is to make sure you keep a large cash cushion. I invest in the market, but never put all my money in market. All thanks to Norman Vitalii for is guidance
51 years old. I have $295,588.25 in my Fidelity retirement account. I cranked my contributions up to 35% with the help pf Norman Vitalii. Fidelity just holds my ETFs/stocks. I made that change earlier this year. I’m hoping to end the rat race by 60 but it’s looking more like 63-ish. I want to have $1.5M and bring in about $60k in dividends each year.
Thank you Nischa sent this to my daughters this is exactly how I’ve lived my life. And generated my wealth I’ve shown both daughters how. One is doing the same thing the other spends money like water although earning 60k plus is constantly complaint that shes living from pay cheque to pay cheque. This is the wake up call she needs !
I didn’t become financially independent until I was in my mid 40s, in addition to owning a second house making money on a monthly basis through passive income, and I’ve also met some of my goals. I really hope this motivates someone to know that it doesn’t matter if you don’t have any of these things yet; no matter your age, you can start today. Investing can help you change your future! By participating in the financial market,Thanks to Norman Vitalii
Three things i will add on. 1. Never get a credit card if you’re clumpsy in financial management. Credit card comes with financial decipline. If you are ready to decipline yourself then go head or else don’t get it. 2 Avoid food which says ‘ Content added sugar’ in super market. This single decision will keep you healthy and wealthy 3 Save for passion. Have passion for which would like to spend. This will motivate you to save. Plan your spendings.
can I also add: don’t pay full price unless there’s no alternative. Most stores have year round sales these days, and there are cyclical discounts such as Christmas sales, Black Friday, Summer sales etc where you can get deep discounts. It takes a bit of patience but if you wait for one of these opportunities to buy the thing you want, you can save so much (and never buy anything in a sale you wouldn’t pay full price for!). There are also lots of places to buy second hand or refurbished goods that are as good as new, and many places where you can get things totally free, such as freecycle.
These are fantastic takes, I feel exceptionally lucky I started investing in my early 30s and consistently compounded my income via assets to create more cash flow. I grew to a 7 figure well-diversified portfolio having exposure to different prolific lnvestments mainly savings account, stocks, ibonds and high yield dividend funds. Forever grateful to my adviser Norman Vitalii.
Another excellent article🔥🔥 I have 10% taken out automatically for retirement; my employer also matches up to 6%. So it’s a win win situation. I have an S-Corporation for my rental property. I live in a small house in a decent area. I have friends with homes 5X bigger than mine and they work 7 days a week. I rather work less and take vacations. Also, small house means= less utility bill amount. I do not own fancy cars. I just need to get from point A to Point B. I’m investing in myself with education. I’m in my 30s and I’m back to school now for MBA.
One of my favourite sayings is that if you take care of the pennies the dollars take care of themselves. This isn’t being cheap but it is being resourceful and not paying more than you need to for day to day things. You could easily save $100 a week just by making smart decisions and not necessarily depriving yourself of anything.
Me and my partner both worked but we have always lived on one income, saving and investing the other just in case anything happened and one of us lost our job, and so that we could retire early abroad. After 25 years of working we have retired abroad (12 yrs now) and are enjoying our life to the full. We worked hard for our money and we always make sure it works hard for us. We have never felt that we missed out on anything by trying to keep up with the latest trend – except maybe all the financial stress of being overstretched 😁
1. I save constantly 2. Loans and debts, even instalments I hate (hence I minimize those) 3. I have stocks per my financial adviser’s guidance 4. I know my usual monthly expenses 5. Gaming is my only expensive habit which I place under control, I rarely spend much 6. I invest in business and private practice 7. Well… I cant control how my taxes go. It’s automatically deducted from my income 😂 8. I learned how to do investments in my 30s… I hope it’s not too late. 9. I care about my finances. I hate not having money 😂
Hi Nischa, I moved to London last year and have been following more or less whatever you’ve suggested in terms of side hustles, budgeting, etc. I would totally love a article on tax because side hustles are getting me confused on how to optimise the other income sources. A article on tax would be a blessing. Thanks for the help so far! 🌻
I have kept my eye out over the years whenever there is a printed review of portfolio management software. I can say unequivocally that there is not a better all-around portfolio management software program out there today. Norman Vitalii handles everything… even those esoteric transactions that no one thinks about talking about in the media. And, Quicken is not sophisticated enough to handle the transactions as seamlessly as Norman Vitalii
Short and right to the point. Love it. I’m 17 and trying to learn more about finances so I can be mature in my following teen years and in my 20’s and so on but still enjoy. Thank you! Thank you so much for all the advice, I’m trying to do everything I can to get better at finances. I’m planning on investing, does anyone have any advice on this? I’m looking into apps in the UK that are free to use, if anyone has advice that would be great. Thank YOU!
“Must be nice!” I wished I had a dollar for every time I heard this. I’ve worked part time most adult life. I’ve traveled lots of the world and debt free. People see me do it and say must be nice. They never focus on fact that I drive a 25 year old vehicle. They don’t focus on fact that I fix/repair instead of throwing away money. “It’s not how much money you make, it’s how much you do not spend” That’s my saying!!
I like that she gives the tip to start building your investments after you have your stockpile or “rainy day fund” as many people call it. I’m in my early 20’s, and there’s a lot of pressure to start investing early (in stocks, in retirement, etc), but I wouldn’t feel comfortable doing that if I don’t even have the money stashed away to take care of myself in anything happened to my parents or my job. I don’t know much about investing, but I know that being aggressive probably isn’t a good strategy for someone without a lot of resources or fall back plan, and I’m glad she feels the same.
As a financial accountant myself I actually advise to create an excel sheet – control budget. I would create an income tab, expense tab and then a statement at the front balancing and tying in the figures from The two tabs. You can easily amend and manage the figures and it will reflect on the face of the statement. Savings is none sense IMO I would suggest likewise to invest in stocks and avoid cryptos. For each expense account I would then physically create envelopes and place the cash in them and seal them (e.g rent, motor and travel, telephone, and accruals for light and heat) that’s my best advice for people who struggle with cash flows ….
These are awesome tips that are all very attainable! Thank you! I work like 6 jobs and each of my jobs pay goes to different accounts set for different things. My biggest money makers go into my auto bills account so that it’s forever refreshing and then the other jobs go into a savings account or a ‘social’ account for going out. And one job I often get cash for and that gets put away, never to be touched unless absolutely necessary. It’s my ‘just in case’ the digital money has any issues fund 🤣🤣🤣😅😅😅
Thank you so much for your articles. You bring up a very important point about taxes… Most people don’t realize the benefits of being aware of how you can minimize the amount you pay in taxes. I can”t emphasize how important this is for you to keep more of your hard earned money for things that will benefit you. Investing would be number 2. 🙂
I am a woman who is an emotional shopper. I withdraw all my money from the account, then divide the cash into saving, bills, groceries, sharing, needs, and wants/ recreation in envelopes. I keep the money home and only take what I allow myself to spend. Financially restricting myself prevented me from overspending. No credit cards needed, because I always have extra money that I don’t touch.
As someone who, up to a few months ago, didn’t know the difference between a credit and debit card, these shorter articles are helping me a lot as I have so much to learn. I am 30 years old and was never allowed to work and as a result, didn’t manage any of the money I was given. When I became free, it was overwhelming to see how much I had to learn, and shorter articles like yours helped me freak out a little less. ❤. Thanks for helping a gal out.
Hi Nischa, have recently found your articles to be very helpful, really love the way you present your articles keep Ming it concise and consistent. Whilst perusal one of your articles, I heard a mention of potential tax advantages to for self employed individuals to show HMRC as working under a company instead of being a sole proprietor. I would be very grateful if you could perhaps make a article on what are the upsides and downsides are of working as a self employed “Sole Proprietor”versus showing as Working under a company. What portentous tax relief or advantages could be.. On a side note, a article on taxes and legal ways of tax relief would be highly appreciated. Thank you for all your inspirational advice. Kind Regards, Gargi Kane (she/her)
I’ve worked full time since I was 18, so for 9 years. I never saved any money because I spent it all on small things like eating out, new pairs of jeans or weekends away. I don’t regret those experiences but I did it far too often. I’m earning about 2500gbp per month now after tax and managing to save 70% of that. I must admit that seeing my savings go up gives me a lot more joy than spending it, because I know that one day these savings will convert into amazing things, but also give me the security that I lacked before.
I have pretty good habits when it comes to what I do with my money. But I earn so little money that even though I am disciplined with it I still don’t get ahead. I mean, an annual income literally below the official poverty level is really hard to overcome. And it’s super hard to increase annual income when one has a fairly low work ethic, no college degree, and a criminal record. I honestly don’t know what to do, given that I am who I am and that much of the past cannot be changed.
I believe the definition of being ‘poor’ has been enhanced to make it initially appear ‘rich’, and then leading to a way on how not to become ‘poor’. The fundamental ‘poor’ person will not have the luxury of going through these 10 things. I am not ‘poor’ hence this article incredibly beneficial though, with added charm. 😊
I’ve always set a monthly budget, never used a credit card, never bought anything I can’t afford, have 5 years left of my mortgage (£450 a month). With budgeting I’ve managed to travel the world, and have absolutely amazing appearances. People say I’m so lucky. No, it was my choice to not buy things I didn’t need, to follow trends and my major out goings being spent on experiences. The highest paid job I’ve ever had is £30k, yet I seem to have more who are on much more.
I used to really believe in most of these wealth making and staying financially comfortable tips before but my take on life has really changed as I have grown older. I fall in the “not caring category.” I believe people should work hard and get what they want in life. I am not saying get into debt and blow away all your money. Bye the cool cars you want to drive, travel and spend money on a few expensive habits once in a while. Death is an inevitability and that is why I cashed out my 401K during the pandemic and invested it. I don’t want to be 59 1/2 years old and the government is telling some company how to disburse my money to me. I want my money now. I am not guaranteed to live till 60.
I’m saving and investing around 70 percent of my income in the financial market(high yield etfs, stocks etc) pretty much how I made my first million although with an FA. I have a high paying engineering job, and I live upstate NYC. my expenses are low. I have zero debt, low rent and car truck paid off. So i can just save. feel lucky at this point I’m actually grateful Norman Vitalii handling my portfolio
Not only “don’t buy what you can’t pay for without a loan”, but consider what if the minute you bought that item/service, you break it, it gets lost or stolen. If this throws you in a financial disaster having to re-purchase it, then that price is probably well out of your range, and you shouldn’t be pushing to reach it just yet.
Your are completely out of touch, you obviously don’t understand what it means to live paycheck to paycheck. At the 1:41 point of your article you talk about going on that weekend trip, FYI people living paycheck to paycheck don’t go on that weekend trip and they don’t have 10% to pay themselves. I lived paycheck to paycheck for a long time and at points when I didn’t have overtime my expenses exceeded my income (expenses include rent/mortgage, electricity, water and sewer, vehicle payment, vehicle repairs, gas, heating oil / natural gas, phone, child care, healthcare). Nothing like someone with plenty of money telling people with very little money how to not be poor. This is good advice for people who just don’t know how to budget. People who live paycheck to paycheck also don’t have money to invest or contribute to a retirement plan. I had no choice but to learn how to budget my money and now I am in position where I can save a little. You are not living in the reality of a very large number of people.
Thank you Nischa, for such a detailed message. Being in my lates 20’s I have really grounded myself, your advice gave me a broader perspective, such as “Paying yourself First”, “Paying too much taxes – find an alternative path (sole-trader), “budget tracker”, and the best part is STOP spending on materialistic items, and invest on yourself, ups killing, as no one can take this away. perusal your article made me realise im actually half way through this, however opened my mind to more paths on how to overcome this. PLEASE DO MAKE A TAX article PLS.
Great content, very well presented. I basically follow all of those suggestions. I have been doing it for years and it just works. It is just common sense at work. I want to learn how to start a business and generate money; being a professional does not always pays off, especially if you are not in a rich sector
I agree with everything you explained except hobbies; for most of us that aspect seems to be the only escape to life we have. Yes we shouldn’t let marketing and social media affect our decisions to get into these expensive spending’s but lots of people still have hobbies they want to experience and have a deep interest in that they won’t change or let go of. I think most of all you need to be able to balance such activates in your life. My personal hobby is cars and it is certainly expensive to maintain. I feel it’s still reasonable because I don’t have many other interests and I tend to keep my costs to a minimal with events such as, going out with friends, clothes shopping, eating out, vacation, etc.
The idea of getting in debt over things like clothing or home appliances is mind blowing to me. But I guess coming from a country where I never had to get into debt over healthcare or education is a huge advantage not only financially but in mindset, I never considered taking a loan for anything else than buying a house was a possibility.
Great advice. ‘Rich’ is relative. So, you have to find your ‘rich’. I teach public school. Buddy of mine is a banker. I asked him for financial advice and he hit me with the truth. “You don’t make enough money to be wealthy. Simple hard fact. You can be wealthy for a teacher but not wealthy compared to others with higher paying occupations” It was sound advice. Now, I don’t feel like I’m doing something wrong because I’m not as wealthy as some folks I know. Being healthy financially is awesome for any tax bracket. But the cold hard truth is the best way to get rich is to make more money.
I was not born to a rich family. But, I am now a self-made millionaire. She is absolutely correct in everything that she says… I know because this is how I achieved and sustained my wealth. I have always invested in property (real estate) even if in the early days that meant that I could not afford to go on holiday, or afford the latest phone, or expensive clothes. Always max out on your personal property purchases even if it means you can only afford sticks for furniture for a while. TOP TIP: When you acquire assets (and, no, 99.999% of cars are NOT assets) do so through a company; one for each asset. You can then loan and trade between the companies to yield tax advantages. It sounds complicated, but it really isn’t. And, you don’t need to have an expensive accountant to set things up for you; you can do it yourself and simply bring in an accountant when you need them from time to time. I DID THIS. IT IS POSSIBLE. YOU DO NOT HAVE TO BE BORN RICH TO PULL THIS OFF.
I love the “pay yourself first” that’s exactly what I’ve been doing for the last 5 years. As soon as I get my money every month, I get 20% and set it aside. The key point is to live BELOW your means. That is what we have to keep in mind. By doing that, not only do you not get frustrated, but also you can save big lumps of money. I always make sure to get 10% of what I make monthly and spend it on some “luxuries”, whether it be buying new clothes, going to a fancy restaurant, or splurging on something I want.
I’ll’ give you a bad advice. Don’t save money. Earn more. Work more. Don’t be lazy. Don’t rely on people. Rely on yourself. It’s the only way to have real money in life. If all you do is saving one day you’ll eventually find yourself in a very sticky situation. Like the end of life with nothing to remember but saving money. There’s no point in money if you can’t spend it on what you want. Just make sure in life that your kids aren’t gonna have to pay after you die.
Under #4 about knowing your income and expense, I would add preparing a monthly net worth spreadsheet. At the end of every month put assets and liabilities into a worksheet to see what your net worth is. As major financial events happen, it helps to see what that does to your net worth. Buying a new car, home, investments, credit card debt, etc. At a glance you can see if your net worth is going up or down and what is causing the movement. I’ve been tracking mine every month since 1995. Seeing your net worth on paper (or in a spread sheet) month over month gives a pretty clearing indication if what you are doing is working.
She is so right! Even if you cant afford it, make paying yourself one of your debts! Start with $20.00 every paycheck xomparing it to saving 1 days worth of meals. Then work towards $20 twice a month then move towards the 10%, just get started. I’m no financial person and I’ve had some issues myself but getting on track is really important. Money markets like Ally bank online pay good interest.
Thank You SO much for this article Nischa!!! Finally someone who explains in a clear, short and direct this whole money thing. I am SO ready to learn. Yes very late in life at 51 but better now than 10 years from now right!? I have always been “afraid” of money. Was taught rich people are not people “like us”. I will take out 10% and pay myself already from this month…. strange how that almost feels scary😏. 💞
Born in 1991 and started working at age 18 on factories, making on average $50k a year in Oklahoma. I didn’t knew anything about finance but it always felt good to have money in my savings account, by age 24 I reached $60k, and decided to start taking risks and study on how to invest. By age 28 paid in cash four 2-1 fixer uppers. Now at age 32, I barely started to learn about 401ks/Rothschild and credit cards, thank you for also mentioning ways to reduce my tax bill other than deductions for my rentals.
The new accountant at my job used to work at a Bank. 2 months before Christmas she decided to start a savings scheme to help us save some money for the holiday. We get paid fortnightly and I was soo worried that the money taken out was going to reduce my quality of life but I didn’t even miss it. By time Christmas came around I had forgotten the money was being taken out then she handed me the envelope of cash. I was soo shocked at how much I was able to save without even thinking about it. I asked her to continue taking out the money for me and I am opening a second savings account to put this money away. 😊
The “pay yourself first” idea is completely idealistic, and doesn’t apply to people on the lower end of the income spectrum. It is a legal requirement to pay your bills, whereas no such legal enforcement is applied to saving money. You have no choice but to pay your bills, whereas saving IS a choice, so to say that you should pay yourself first is to imply that necessities don’t take priority over what is merely optional. It’s logically nonsensical.
Hello Nischa! I have a degree in economics and also a career in investment banking and I must say I watched twelve of your articles in one go! You are a breath of fresh air in the panorama of youtubers with finance websites. Congratulations on the content, but IMO the secret of success is in the captivating, clear, concise way of presenting and also in your personality that always shines through. There is no shortage of ingredients. Congratulations!
No-one ever got rich by spending money. That’s my number one rule. I meet so many people here in the UK who ‘just go for a coffee’ or just ‘grab a bite to eat’ and they’re spending around £10 – £15 per day frivolously on stuff like that. Over a year, that’s over £3k. Then even driving – they gotta accelerate faster than others, so spending an additional superfluous £500 – £1000 per year on fuel. Now that’s all OK if it’s what they want to do, but then don’t turn around and say you haven’t got the money for that luxury item you want.
Very good advice. You will be financially sound if you listen to this advice. My dearest Grandfather taught me the rule of three . When you have your paycheck . Save some Pay your bills Finally enjoy whatever is left.. I followed this advice and have never been in debt I couldn’t pay off and never had a sleepless night over money worries.
1. Paying yourself last: Pay yourself first by setting aside at least 10% of your income into savings before paying bills. 2. Getting comfortable with bad debt: Avoid debt for small purchases and aim to pay off high-interest debt as soon as possible. 3. Not having a stockpile: Save enough to create a six-month financial buffer, then focus on investments. 4. Not knowing your income or expenses: Track your spending and income to avoid lifestyle inflation and set clear financial goals. 5. Having expensive hobbies: Be mindful of spending habits and resist the fear of missing out due to marketing messages. 6. Focusing only on saving: Aim for a balance between saving and creating additional income streams. 7. Paying too much in taxes: Learn about tax rules and structures to legally minimize your tax bill. 8. Waiting too long to invest: Start investing as soon as you have a financial buffer to make your money work for you. 9. Not diversifying investments: Diversify your investments to weather different financial situations and protect against inflation.
Adding also on spending habit, understanding the difference between ‘need’ and ‘want’ will make this bad spending habit more manageable. A need is something that is fairly essential and you could die without (sadly these days extended to the internet and mobile phone bills). The rest is almost literally just people wanting to buy something new, including new clothes, new shoes, new phone. Ask yourself a couple of times before buying anything, ‘do i really NEED to buy this?’. It will help switch your bad spending habit (or reduce it by a lot) imo.
What valuable advice! Growing up with the mantra ‘live below your means’ is a wisdom-packed approach to financial well-being. The idea of intentionally choosing items slightly below what you can afford is a smart way to ensure financial stability and build a solid foundation for the future. It’s a practical strategy that not only prevents stretching oneself thin but also opens up opportunities for savings and investments. This mindset is a timeless principle for achieving financial success and security. Thanks for sharing this insightful perspective that resonates with many seeking a balanced and sustainable financial life!
Great advice. I’m interested in your opinion about renting vs owning a flat/house. Me and my husband can currently afford like a third of a flat, so we could get a loan for it and ” pay ourselves” instead of the landlord and in the long term own it. Monthly rate is the same or could be even cheaper if you buy. What’s your advice on this topic? Thanks.
I’m a student and manage to live a comfortable life on little money. Even though my cost of living will rise once I get my first full-time job (as I won’t be allowed to live in cheap student accommodation any longer), I want to maintain my current level of spending. As you said, it would be a shame to spend more just because you have more money. It doesn’t make sense to me to spend just because you can. A lot of the times, the more expensive product is the same as the cheaper option, just with a fancier packaging.
Stumbled across your website what sound advice!!! In my younger years I didn’t card about tomorrow because I wanted to live for that day. Ugh!!! Thank goodness I have a financially savy husband who took the reins and I no longer live that way. Savings diversified, home being paid off in 24 months and retired at 52. Thank you for your website! Plus it’s always great to see a woman and a pretty one with a good head on her shoulders! Brava
Hello Nischa, I’ve been following the website for quite a while and I’m enjoying the content and I found it quite valuable. I would like to ask if you can make a article about the transition from a 9 to 5 job to a remote job / financial independence or how to plan this transition to be successful and not be forced to return to the old job, if you have a article on this topic can you point me that way I would gladly watch it. I really watch a lot of articles about remote working and financial independence, and I know one of the things stopping me from making the change is Overthinking and by that I mean I’m too scared that if things don’t work out what I will do. Looking forward to your future articles and if you consider this for an idea, it would be much appreciated (there are probably other people in the same situation). Keep up the good work.
Based on my experience with saving, here are my thoughts: -It’s all about a mindset. Stop following the trends in fashion, electronics, cars, etc. Just get what is suitable and works for you. Don’t buy expensive clothes or brands. Use your phone until it reaches its maximum lifespan of around 4 to 6 years. -Cook at home as much as possible. Plan to eat outside two times per month, for example. -Buy from the wholesale market at the lowest possible price. Get enough quantity to cover almost 20 days of the month. For example, canned foods that you use in cooking. -Don’t spend your money to look rich, or you’ll end up bankrupt. -Avoid debt as much as possible.
Very important to live within your means. Don’t put yourself into debt trying to impress others. If you’re someone like me, who’s low income, incorporating the cash envelope method into your budgeting is a life saver. Putting a little aside each week or month means that you never have to fork out a huge amount in one go for anything such as rent, car payments, birthdays, Christmas, holidays, insurances etc
Thank you for the articles, im glad i found you! I used to spend money on so much unnecessary stuff, had credit card debt for years but then finally got my sh*t together, paid off the debts, started saving and even managed to buy a flat! It is all about discipline and thinking long term. I’m still keeping the good habits going, i have a spreadsheet with all income, expenses, and keep living on a budget even if i dont have to, just so i keep saving. Im very interested in investing and also on some advice on what to do with spare money – should i buy another property or invest in the market or is it better to pay off my mortgage earlier if i have a chance? Also whats your opinion on pension savings? Im going to read your recommended books too, thanks for the tips! Keep going, a lot of people need the advice!
Thank you Nischa, I love your website, I’m sad that I’ve only just discovered it! Your advice is easy to listen to, well described and you make it easy to implement also. I would love a article on Tax please. Could you recommend an online accounting course? I want to see if I can do my own side hustle books before I pay out for an accountant. Thank you 🙂
Hello!! Just discovered your website, and I’m invested in the incredible advice you give. I’m a full time student, and was wondering if you could make a article about your experience with college debt and how to avoid getting too deep into it or just your perspective in general on the topic? Thanks, love your content.
Whenever sellers say “I could offer a 6-month payment schedule”, my answer is “I do not have a credit card, I buy when I have money, and I don’t when I don’t have it”, this sentence gives me immense power and pride. However, I am bad at other aspects and have decided to correct my mistakes and start saving and investing. The article was very helpful. Thanks a lot.