the millionaires I admire the most track only four numbers that's it these are the very same four numbers that I myself track and I want to show you what they are today that's right you don't need to track 50 numbers you don't need to know the PE ratio of anything you don't need to track the price of ketchup at the grocery store ever you track these four numbers you can spend less than 1 hour per month on your finances now let's get to it first up let's talk about number one fixed costs this category should
be r ly 50 to 60% of your take-home pay now this is really important because if your fixed costs are higher than that you're going to find it very difficult to save money on anything you're going to find it very difficult to have enough money to invest and you're going to feel stressed out cuz you're not going to have enough money just to have fun so here's what fixed costs include your rent or your mortgage your utilities your transportation not just the car payment but also the gas and the annual registration all of it grow
groceries debt payments including student loans and your subscriptions now here's a little tip after you've added up all of those big parts of your fixed costs add 15% that's because most of us don't capture all of the Hidden expenses in our fixed cost for example you probably didn't capture car repair which can cost let's say $400 each time that's actually $33 a month you probably didn't capture emergency medical care or charitable donations there are just things we forget about a flat 15% will cover you for things you have not figured in and over time you
can get more accurate now that you have your total fixed costs plus the 15% look at what percentage that is of your take-home pay in other words add it all up and divide by your take-home pay is it under 60% if so awesome job if you find that your fixed costs are too high which is really common It's usually the result of one or two categories housing or your car now I see a lot of people spending and I consistently see people paying too much for their housing in their car think about it how did
you decide how much you could afford on your rent or your mortgage how did you decide how much car you can afford most people literally just look at the monthly payment and they go yeah that sounds good 400 bucks a month wrong here's my suggestion for you before you buy these big ticket items you've got to be really thoughtful about how much you can actually for it's not enough to say I want a Mazda no you've got to go deeper than that for example when it comes to housing you've got to factor in all the
Phantom costs taxes utilities maintenance and then you can use some guidelines for example housing should ideally be no more than 28% of your gross income if you can hit that or if you live in a High Cost of Living City you can stretch that to 32 maybe even 33% now you're starting to make more intelligent decisions and I cover these Frameworks in my book I will teach you to be rich for your your car you've also got to look beyond the monthly payment for example when I had a car payment it was a $350 car
payment but when I factored in everything gas parking Insurance parking tickets all of the above it cost me over ,000 a month from $350 a month to over ,000 a month is it any surprise that most Americans have no idea how much their house actually costs them is it any surprise that so many of us feel stressed out about money it's cuz we have no idea how to even decide on the biggest two purchases of our lives so again if you find out that your fixed cost are too high I would look at your housing
and your car payments first if those are good you can move on and cut back in other areas for example like groceries the point is you only have to look at a few things in this bucket to get your numbers where they should be if you find yourself tracking the price of broccoli at three different grocery stores you've taken a wrong turn reverse pack yourself on the back say I can do this I don't need to be a psycho and then focus on the big numbers keep tracking your key numbers and make sure that your
fixed costs are between 50 to 60% of your take-home pay moving on to the second number you need to track long-term Investments now this category is so important because this is where real wealth is created my recommendation is that you put at least 10% of your take-home pay in Investments of course the more the better now this bucket includes the amount that you will send to your 401k and Roth IRA I know some of it's post tax and pre-tax we're just going to simplify it here okay just to say 10% of your money should be
going to Investments at a minimum let's say you're contributing 5% of your salary to your 401k and another 5% to your Roth IRA fine close enough why do I recommend you invest 10% minimum because that money compounds it grows like you would not believe there will be a point where you'll be making more from your Investments than from your income let's take a look at these two examples Savvy Sally actually invests less but ends up with $60,000 more let me show you she invests $200 a month from ages 35 to 45 and that's it she
never does anything else she just puts it in there and it grows now naive Noah comes along he's too preoccupied to worry about money he goes I'll get to it someday and then he saw the name of my book I will teach Bri he goes that sounds like a scam so he didn't read it for 7even years and then finally on some obscure subreddit someone goes oh you actually should really read this book it's not a scam it's actually been read by over a million people it changed my life that okay fine I'll read this
stupid book I will teach you to be he picks up the book he reads it he goes oh God I wish I read it before why didn't anybody tell me I wish this material was out there years AG naive Noah this was out there for a long time anyway his name is naive Noah you can't really get too mad he's naive so naive Noah says you know what I'mma change my life today I'm ready great naive Noah starts investing at Age 4 45 and he invests $200 a month same amount until he's 65 so he
invests for 20 years compared to the 10 years that Savvy Sally invests for okay Savvy Sally has $60,000 more even though she invested for half the time this is the power of compounding and this is why the earlier you start investing the better now if you are watching this and you're 48 years old and you're starting to get depressed you have tears running down your eyes take a second dab those eyes you'll be fine you can still start investing today yes you need to be more aggressive with your Investments yes it would have been nice
to start at age 14 we all wish but the second best time is to start today to see what your own Investments could look like I would recommend searching for a compound interest calculator and enter some numbers you can experiment with $100 a month $200 a month $500 a month even $1,000 a month assume a 7% return just to be conservative you'll see dramatic differences over 10 20 30 40 years now if you don't have any money left over to invest and you know that your fixed costs are already 50 to 60% then I would
take a look at your spending later on in this video you might be overspending on eating out frankly you probably are some of my old degenerate readers used to overspend on alcohol but you know nowadays people are not doing that as much so fine you're probably overspending on eating out you know it I know it I see your phone I've looked at people's door Dash accounts fine once you discover what you can cut back on you can redirect the money from there to your Investments but we will get into that for now just remember this
investing is where real wealth is created that is why it's so important to start as early as possible and to invest every single month automatically aim for 10% if you can up it by 1% every single year now that we've covered your fixed cost and your Investments we're going to move on to the third number you need to track which is your savings goals your savings goals should be at least 5 to 10% of your take-home pay what is savings a lot of people like oh I should save money mom told me d dad told
me we don't even know what savings is for therefore we're not going to save money if we don't even know what the purpose is let me tell you your savings category is for money that you're going to use between 1 to 5 years from now let me explain it could be that you're saving up for a nice trip you're saving up for a beautiful coat okay those are nice things that you can save up for as opposed to just spending and then figuring it out later you might be saving up for something bigger an engagement
ring a down payment on a house and your savings category should always include an emergency fund I recommend 3 to 6 months of enough expenses to keep the lights on what I mean by that is if you got laid off or something really bad happened you'd probably cancel your subscriptions you'd probably stop eating out so calculate how much it would cost you just to keep the lights on and then multiply that by 3 months or 6 months and that's how you can save up for that now I recommend 3 to 6 months personally I have
12 months because I'm a little bit more conservative with money it's okay if it's 3 months or 6 months for you just know this know that that goal is going to take you a while to fill it up it's probably going to take you years to get six months of an emergency fund that's fine if you're putting a 100 200 300 bucks a month away for just that letting it sit there fantastic just keep contributing to it every single month 5 to 10% of your take-home every month can be put into savings and then further
subcategorized some of it can go to an emergency fund some of it can go to a down payment some of it can go to a beautiful coat and this is really important if you don't have money left over to save you got to take a look at your spending to see where you can cut back to add money to speaking of which that brings me to the fourth number you need to track guilt-free spending and this is actually my favorite one of all the point of money you frugality freaks is not to Simply sit there
and hoard it and look at your different little calculations every day B3 2 minus b42 oh my gosh I grew my net worth by $133,000 it's so cool let me post on Reddit all right if if you enjoy that God Bless but the point of money is not simply to save it the point of money is to use it to live your rich life yes you should save yes you should invest what did we just talk about but also you've got to spend it on things that are meaningful to you after you pay all your
bills after you invest after you save this is the guilt-free money the stuff you can use on anything you want and depending how you've structured your other buckets a good guideline here is 20 to 35% of your take-home pay for guilt-free spending that's a lot of money that's 20 to 35% of your take-home pay you can use on restaurants bars taxis vacations clothes whatever and yes 20 to 35% when you hear it you go oh my God that's a lot but you have to remember this this is an area where if you're not paying attention
a lot of people end up spending 50% a lot of people are actually spending more than they make every single month and they don't even realize it so if your fixed cost number is where it should be 50 to 60% if your savings is where it should be 5 to 10% Investments 5 to 10% you've got a pretty healthy amount to spend on guilt-free spending and there is one additional Dynamic especially for the people watching this video which is some people have an artificially low guilt-free spending number all right I talked about the people who
spend way too much what about the people who come me REM Sati I'm so proud I only have 5% guilt-free spending and then they go like this that's that's them waiting for me to applaud them oh my God you're so cool you only spend 5% that's a failure if you're only spending 5% of take-home pay on guilt-free spending you suck at the skill of spending money that's like saying I've been lifting weights for 30 years and I'm doing a one ounce bicep curl it's like have you ever heard of progressive overload have you ever heard
of working your your muscle and working the muscle of spending you've got to learn how to spend your money meaningfully now I recently spoke to a guy about his finances he'd saved consistently he'd invested he'd increased his income but he could not bring himself to spend his money if you have watched any of my podcast episodes with multi-millionaires you're familiar with this they go oh one day I'll spend it that I just need an extra $1 million and they get the $1 million and they never do anything with they or $10 million so I asked
him are you aware that you are over saving you should have seen the look on his face it would have been like me saying are you aware the sky is green he had literally never ever heard this question before for people whose identity is made up of diligent saving this question literally makes no sense how can you overs saave isn't that like over breathing oxygen but you can overs over Savers believe that one magical day they'll suddenly be able to enjoy spending but most of them cannot their spending skills have atrophied and once your identity
becomes focused on saving it is very hard to change a lifetime of operating on how little you can spend cannot be shifted overnight this is why my mission is to show you how to live a rich life today and a richer life tomorrow because if you wait it's almost impossible to change so follow my guidelines for each of these four numbers so you'll be able to save invest and best of all enjoy your money don't forget to subscribe so you won't miss out on any of my new videos on money psychology and check out this
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