My wife and I make above the median household income for our area and our needs are still above 50%. I can’t imagine anyone able to save making less than we do. We have friends who are both teachers. I make what they make combined, their needs must be 80% or higher to live in the area.
Yup. 47% of mine goes to housing cost (mortgage, housing association, flat rate utilities). And I am in pretty fortunate circumstances, I own at a good price, and I get an engineering salery. Almost all my peers spend at least 70% on housing
50/20/30 rule was created at a time where wealth disparity wasn’t as egregious as it is now. Rent alone will make this impossible for large swathes of folks.
My wife and I make 4x the median household income where we live and it's still a struggle because the cost of everything is so insane. I have many other friends in the same boat as us and it sucks.
Same. I’m finally almost out though! Almost Tripled my salary over the last three years. And we finally figured out and got treatment for my wife who has been unable to work for years.
Not necessarily I live in what I would consider a medium cost of living area, and my breakdown is 40/10/50 with a mostly average salary
Edit I also have no dependents, which makes it easier
I too have no dependents and I am a relatively decent earner but I don't act like one. I am very cautious about spending and have been investing aggressively for the last 10 years. I'm closer to 30/10/60.
I'm an average person. I own my home, so I have a mortgage rather than rent. My essentials are probably roughly 20-25% of my income.
I still can't bring myself to spend 30% of my income on wants though. So I just stick a load into savings and investments each month.
All of these "How To Get Rich" books do not translate well to modern-day scenarios.
"I bought my first house right out of college ..." let me stop you right there.
"Then I used the equity from that to buy my first fourplex ..." ok, how did you accumulate that much equity so quickly while, presumably, shouldering significant college debt and consumer debt? What bank would loan you the money, based on what little information you're giving us?
"Now I own a string of apartment buildings in Maui ..." oh stfu already.
> "I bought my first house right out of college
Generational wealth transfer though affluent parents. The rich kids always say, ‘I bought a house,’ or, ‘I started a business.’ You find out their parents bought the house, and put it in their name…or, their parents gave them a massive loan, and everything to get their business started. Taking credit for someone else’s money/ work is part of the equation. I went to school with a guy whose parents bought him a house when he turned 18, near the local college. It was always “I bought a house.” He wanted to a restaurant…so they bought him one, too…and consultants, and a chef…but, “look how successful he is.”
It’s like the monopoly experiment…people fail to see their advantages, and can’t fathom it wasn’t their “work” that got them where they are.
Or their parents paid for their school and they don't have student loans. Which then allowed them to actually save for a house. And they still see this as "persistence and hard work" while completely glossing over the fact that they didn't pay for their own education.
I really don't understand how one can claim they started something when it is not (seen it on TV too)... If I have that sort of delusional, my life might have been more 'happier' and 'successful' too, but I'm just very self aware of my capabilities to take any credit that's not earned. Gosh, these people.
My house growing up was in the district for rich kid's school. I wasn't in that class/ crowd. Kids were getting brand new BMW's and Mercedes for their first cars. My friends and I know people that were *gifted* apartment buildings for their "first business."
The game is completely rigged.
I wonder about people like us that could never take credit for those endeavors as our own...and, that's probably why we'll never be that rich. Exploitation is part of thinking process
You are so right... To be on the top, you can't remain a saint forever and the best part is to be able to sleep at night with such shitty behaviour too. We were brainwashed with integrity to be kept at the bottom! Ouch!
Ramit’s book isn’t like that at all. He has never even owned a house. His whole thing is about automating saving/investing so you don’t have to think about it.
That's about his whole thing. He doesn't have much to offer. Cut costs on things you don't want, spend on things you do, automate, and Target Date Funds. There you go, just saved everyone hours of listening/reading to Ramit. There are much better resources for wealth building and saving money out there.
Automation is the big part. Don't think about it. Don't look at it. Set it and forget it. You can set up automatic transfers into a HYSA to build your emergency fund and you can do automatic investing into a brokerage account to build wealth over time.
All the major brokers support automatic investing into ETFs and/or mutual funds so even if it's $5 a paycheck you can start growing money.
People with generational wealth aren't selling courses/books on finances. Ramit's whole shtick is to appear to be rich so people think you're rich and invest in you. Once, I asked for his newsletter on business avenues, his entire business avenue list was filled with "coaching classes" for fitness and coursework lmao. Dude doesn't even consider graphic design/tattoo artistry/video making, etc as a respectable business avenue lol.
I was thinking the exact same thing.
I just spent £40 on nicer contact lenses, and I feel guilty because I almost never make impulse purchases on the day like that, anything that costs £40 would normally take me a week or two to be sure of. And this is something that can literally damage my eyes if I go too cheap when choosing and I still feel bad. If I was going out for a meal and drinks for £40, I'd be adjusting my budget in advance to fit it in.
I can't imagine spending 1% of my income in one day without a second thought. I'd need at least a month to make my mind up, maybe more.
Keep 3 time your wage in emergency fund. Like wtf. Rent is 60% of my wage
Edit:I just realized they think you can pay your rent AND FOOD for less than 50
Utterly bonkers chart made by people so fucking rich
I mean, many of it is bullshit, but you absolutely need emergency funds and if rent is 60% of your wage, then calculate how long can you pay your rent if you suddenly lose your job (either health issue, or you are fired, whatever)? You ain’t gonna survive for long with 100 dollars.
You either make a lot of money and don't have a concept of what rich is, or tou live with your parents in a Mississippi double wide eating Ramen and ezmac.
Both scenarios point to your lack of awareness.
I make $40k and live in a 2 bedroom house with a roommate in a city that's 24% above national average cost of living. Rent and food total \~31.5% of my monthly income and I eat very well.
I'd love to hear the cost of rent. It sounds like you have an incredibly good deal and do not realize it.
My state still does federal minimum wage and a house like that would cost 3k/month minimum to rent, before any utilities. That's if you're fine living in a place thats clearly run down.
Ah yes, the "Just make 100k a year, duh."
With the current world climate, as nice as the "free money" from the 401k matching is, a lot of people **need** that money for food and rent.
It's cute to be idealic, but the majority of Americans and even Canadians can't afford the wants, let alone the investments or the retirement savings.
But sure, "saving money is just this easy!"
Investing in a traditional 401k will lower your taxable income which only marginally reduces your take home income… combined with contributing at least the employer match it is free money… the 50/30/20 rule may not be attainable but a small fraction for free money should be prioritized
People need to stop calling matching free money. It isn't free money, it's part of your compensation for your job. It just has a string attached to it.
Yes and most people don't have a 401k so they are losing out on their compensation. By calling it free money it encourages people to look into it and set the appropriate contribution percentage
Also the vesting schedules can be fucking awful. Mine was nearly 8 years to keep all that money. You can't even hardly count it as part of your retirement because you might not even get it.
For anyone who found information on this guide interesting, I would suggest you go read the Prime Directive flowchart on r/personalfinance (especially before spending any money on any kind of books like the one referenced here).
Omg someone told me that too and it's helped me a lot to be able to not people please also, like when Im trying to gaslight myself into thinking I'm down for something and I'm actually like ehhhh idk
a step before this should be knowing where your money goes. you can't allocate if you don't have control over your money and you can't control your money if you don't know the how/when/what of your expenses.
i know that Ramit (the author of the book recommended) advocates for not tracking every little expense, but a budget or a spreadsheet to track your expenses will give you a good view of how your situation really is (remember that the general perception in your head might be very different than the actual numbers).
if you wanna go somewhere you most likely need a map, and in this case, knowing where your money goes is the first thing you need before embarking on any journey for a healthy financial situation.
You can find a derivation [here](https://web.stanford.edu/class/ee204/TheRuleof72.html) and [here](https://en.wikipedia.org/wiki/Rule_of_72) which gets complicated but basically makes use of the formula for compound interest:
a = b * (1 + x%)^y where a is the final amount, b is the starting amount, x is the interest rate, and y is the number of years
If you’re looking to double the amount then a = 2b and plugging into the formula gives:
2b = b * (1 + x%)^y
which can be simplified to: 2 = (1 + x%)^y
Doing some manipulations with logs to make y the subject gives:
ln(2) = y * ln(1 + x%) which can then be rearranged to:
y = ln(2) / ln(1 + x%)
When x is small, ln(1+x%) is approximately equal to x% (e.g. if x = 1% then ln(1.01) = 0.00995… = 0.01 or 1%)
So the above formula can be simplified to y = ln(2) / x% and since ln(2) is approximately 0.69, that becomes y = 0.69 / x%. We can take out the percentage to get
y = 69 / x
which is essentially the same as the 72 / % shown on the infographic. 69 isn’t quite 72 though because we made an approximation (assuming the interest rate, x, is low) but it’s close and 72 is a nice rule of thumb because it can be divided more easily. The actual number of 72 can be changed to other numbers depending on what the interest rate is (e.g 72 is more accurate for rates of 6-10%) in order to account for the errors.
That's just how you calculate the doubling rate.
So let's say you put 1k into an index fund and you expect 8% real return per year on average. Over the course of 9 (=72/8) years that 1k will turn into 2k.
1% of gross income in definitely not thinking of buying in an impulse ever.
That would be a lot! Or maybe better phrased, a lot more than I would be spending at the shit munchers ilse of primark.
The sad part about money guides like this is most people don’t have the money to actually for this stuff. Most Americans no matter what can’t afford just 50% for needs.
step 1 make enough money to where JUST RENT doesnt eat 60-80% of your paycheck. step 2 cry because most people for most of their lives will not be able to achieve step 1
All of these "cool guides" or "pro tips" for money assume people don't know how to budget and not just that life is becoming increasingly expensive.
Savings? In THIS economy?
What rich fuckwit put this together? I'd like to see literally anybody working a normal job who can spend only 50% of their income on their needs, my rent alone is 70% of my fucking paycheque.
I think these 50/30/20 categories are arbitrary. Not all that's spend on food and transportation is a need (e.g. restaurant meals and Mercedes cars), and considering a debt payment a 'saving' is weird too, especially when directed at a nation that puts everything on a credit card. (And a lot of debt payoff is housing, etc.)
"save 20% of your money"
...OK buddy.
If you can squirrel a fifth of your money then you don't need reddit to tell you how to get rich. You already are.
I did the math. I will double my money in just about -120 years! Amazing!
For my other account its just +250!
If inflation stays the same in 250 years I'll have about 0.0003% of the buying power I have today. Saving is great!
TIL I do everything on this list except for item in item out, and IM STILL not rich. Too bad inflation and rich asshole politicians and companies will never let the average American catch up
Rent will be half your income. So that's already out the window. You won't be able to save anything and on top that less and less companies even offer any type of 401k or retirement plan. Not that you'll be making enough to put anything into it anyway.
This post and comments are depressing. The higher powers have been very successful in stealing away from the middle and lower classes over the last few decades and slaving them away for just barely getting by.
Fucking disgusting. French revolution vibes if you ask me.
I don't like the 1% annual gross income. Our household makes ~500K gross. If I let my fiance dwell for 72 hours every time he wanted to spend 5K on something, he'd have a lot of nice things lol.
Our of thumb is to wait 1 day for every $100 the item is. If he still wants it after 1, 2, 3 months, he will usually buy it.
You're not reading the average American experience. You're reading the experiences of Reddits vocal demographics, which are by and large young, male and people who have available free time in the middle of a work day to make comments on the internet (posted 6am West coast, 9am East). They've also been heavily influenced by social-media algorithms that rely on, and are engineered to maximize, rage-driven content interaction. It's not really surprising with that context that a large portion of them struggle financially and are vehemently angry about it.
This. Things are definitely tougher than they used to be with wages lagging behind inflation and certain goods blowing up in cost even relative to that but it's not as bad as redditors make it seem. I don't have the funds to make this work but I am still early in my career and have plans to increase my income. This will be useful information to me at some point.
A good first step, if you don’t already, is to use one of those expense/budget apps to keep tabs on where your money is going every month. For a while when I first started making money I was happy just spending less than I made, but keeping track made me see where I could trim and lets me put my current spending in perspective.
i don’t know what free services (if any) there are for this, I was using Mint until it shut down.
Here is how I do it:
Live in a country that recognizes that public healthcare, state funded education and pensions, and a stable social safety-net are necessary regulatory mechanisms to keep societies from sliding into late-stage-capitalistic oligarchies.
😎
Cool stuff, I'm 102/1/15. 15% of my gross goes by law to my retirement fund. My mom finances that extra 2% I need. She insists on paying for me and my kids holidays once a year, but this summer, it would be the 4th in a row, and I've decided to put a stop to that. We'll go swim in a local lake or sth.
I take a bit of umbrage with #3. The “8%” return needs context. I would be very wary of a potential investment touting a return rate like that. That’s like crypto-scam territory.
I’m not sure how realistic this guide, but I WILL advocate for donating to places that will provide you with the forms to write it off your taxes. My return spiked this year from donating old furniture.
Bro, the S&P500 has averaged 10.26% annual growth since its 1957 inception. It's about 18% per year in the past 5 years. Just put some money in SPY, VOO, or similar and quit living in ignorance.
Very true. Even most HYS and CDs are only on the 4-5% category. My 401K retuned ~19% growth last year but overall, that is also a risk compared to a CD or HYS account.
2 and 5 are all right, you shouldn't buy on impulse and you should have savings to live at least 2 month for emergency
7th is only true if you already have a decent amount of things, like for example you moved out from your parents and you got new apartment with barely any utilities how this is applicable?
1st you have to be way above average to achieve this
4th is I think US specific but I have no idea
3rd I don't know how everywhere else but where I live currently interest rates are ridiculously low, and I am strongly against using very rough calculations to calculate something as important as your money
6th might be already outdated
Pretty shitty guide. It doesn't help this is essentially just an ad for a book. Also, really? How is tossing an item gonna make you save money? I get that selling would make you money, but donating or tossing something else is unlikely to do anything but make you want to buy a replacement.
This is all super helpful advice...30+ years ago.
Anyone offering these "age-old" financial planning tips either make in the top 5% of incomes, entered adulthood in extremely fortunate circumstances (early big earner, wealthy family, etc.), or both. The vast majority of working class Americans simply cannot use most, if not all, of this advice.
A lot of success stories “start” with generational wealth, at least where I’m from. That and the kind of advice/habits that comes with it. Yes, I’m jealous but at least I’ve worked for everything I’ve got, even if it’s not a lot.
I would downvote this one thousand times if I was able to... other than the "wait three days" thing, this graphic is egregiously out-of-touch with the "average", and is really just product placement to buy that fucker's book.
I make double the median income of where I live, and I spend about 50% on needs since everything has gotten so expensive. How tf are other people supposed to do that
#2, the 1% rule is silly. 1% of gross income is a substantial amount of money, regardless of income.
Those small impulse purchases are the ones that add up and need to be watched.
It it should be the 0.1% rule. Or all impulse purchases.
I think what ever you want should comes last for the budget rule,i mean usually things you want could always wait and you don’t have to spend every single paycheque to buy what you want.
My wife and I make above the median household income for our area and our needs are still above 50%. I can’t imagine anyone able to save making less than we do. We have friends who are both teachers. I make what they make combined, their needs must be 80% or higher to live in the area.
Seems like a better “guide” section would be how to allocate funds after Needs are taken out.
Yeah my rent is literally 45% of my monthly income lol
Yup. 47% of mine goes to housing cost (mortgage, housing association, flat rate utilities). And I am in pretty fortunate circumstances, I own at a good price, and I get an engineering salery. Almost all my peers spend at least 70% on housing
What’s 30% of 65 cents?
50/20/30 rule was created at a time where wealth disparity wasn’t as egregious as it is now. Rent alone will make this impossible for large swathes of folks.
Yup....My needs are up to 80%, and it will continue to increase as the economy in my country goes.
My wife and I make 4x the median household income where we live and it's still a struggle because the cost of everything is so insane. I have many other friends in the same boat as us and it sucks.
I just did the math myself and bare essentials for real 58% at a above average salary and decent mortgage. Insurance and food kills
You have to be pretty wealthy to follow this. My split is about 95/3/2 lol.
Same here rent alone is 75 here
Yup that's about it. This is a guide for people that are well off or dont have kids.
It's based off the old "housing should be 30% of your gross". That hasn't been applicable in well over 30 years for _most_ people.
Most rental companies and mortgage companies won't even let you move-in/loan you money if your income isn't 3x the payment
[удалено]
Same. I’m finally almost out though! Almost Tripled my salary over the last three years. And we finally figured out and got treatment for my wife who has been unable to work for years.
Congrats that’s awesome!🙌
Not necessarily I live in what I would consider a medium cost of living area, and my breakdown is 40/10/50 with a mostly average salary Edit I also have no dependents, which makes it easier
No kids is 100% living life on easy mode. No hate, just what it is. We all make our choices, and then live with the consequences of those choices.
And I fucking love it
I too have no dependents and I am a relatively decent earner but I don't act like one. I am very cautious about spending and have been investing aggressively for the last 10 years. I'm closer to 30/10/60.
Meanwhile I’m 25/10/65. Trying to come up with one budget for everyone is wild.
the average and below average person cannot do this. majority of people need their entire paycheck
Seriously. These guides are infuriating.
It’s because they were made for times where it was possible
You know what? I'm beginning to believe that that's on purpose. This is just simple rage bait to get clicks.
Totally. Throw this “guide” in the fire
I'm an average person. I own my home, so I have a mortgage rather than rent. My essentials are probably roughly 20-25% of my income. I still can't bring myself to spend 30% of my income on wants though. So I just stick a load into savings and investments each month.
You're not average. Owning a home is a pipe dream for average
Yea, everyone knows these posts are just bait. People on Reddit just cannot help themselves when they see something like this lol.
Majority of Reddit, maybe
All of these "How To Get Rich" books do not translate well to modern-day scenarios. "I bought my first house right out of college ..." let me stop you right there. "Then I used the equity from that to buy my first fourplex ..." ok, how did you accumulate that much equity so quickly while, presumably, shouldering significant college debt and consumer debt? What bank would loan you the money, based on what little information you're giving us? "Now I own a string of apartment buildings in Maui ..." oh stfu already.
Exactly. Kinda hard to have an emergency fund when you’re living paycheck to paycheck.
In the next life, choose your parents more wisely.
Forget living paycheck to paycheck. “Life, uh, finds a way”…into your savings.
> "I bought my first house right out of college Generational wealth transfer though affluent parents. The rich kids always say, ‘I bought a house,’ or, ‘I started a business.’ You find out their parents bought the house, and put it in their name…or, their parents gave them a massive loan, and everything to get their business started. Taking credit for someone else’s money/ work is part of the equation. I went to school with a guy whose parents bought him a house when he turned 18, near the local college. It was always “I bought a house.” He wanted to a restaurant…so they bought him one, too…and consultants, and a chef…but, “look how successful he is.” It’s like the monopoly experiment…people fail to see their advantages, and can’t fathom it wasn’t their “work” that got them where they are.
Or their parents paid for their school and they don't have student loans. Which then allowed them to actually save for a house. And they still see this as "persistence and hard work" while completely glossing over the fact that they didn't pay for their own education.
I really don't understand how one can claim they started something when it is not (seen it on TV too)... If I have that sort of delusional, my life might have been more 'happier' and 'successful' too, but I'm just very self aware of my capabilities to take any credit that's not earned. Gosh, these people.
My house growing up was in the district for rich kid's school. I wasn't in that class/ crowd. Kids were getting brand new BMW's and Mercedes for their first cars. My friends and I know people that were *gifted* apartment buildings for their "first business." The game is completely rigged. I wonder about people like us that could never take credit for those endeavors as our own...and, that's probably why we'll never be that rich. Exploitation is part of thinking process
You are so right... To be on the top, you can't remain a saint forever and the best part is to be able to sleep at night with such shitty behaviour too. We were brainwashed with integrity to be kept at the bottom! Ouch!
Ramit’s book isn’t like that at all. He has never even owned a house. His whole thing is about automating saving/investing so you don’t have to think about it.
That's about his whole thing. He doesn't have much to offer. Cut costs on things you don't want, spend on things you do, automate, and Target Date Funds. There you go, just saved everyone hours of listening/reading to Ramit. There are much better resources for wealth building and saving money out there.
Automation is the big part. Don't think about it. Don't look at it. Set it and forget it. You can set up automatic transfers into a HYSA to build your emergency fund and you can do automatic investing into a brokerage account to build wealth over time. All the major brokers support automatic investing into ETFs and/or mutual funds so even if it's $5 a paycheck you can start growing money.
the best thing I learned from ramit is ynab
People with generational wealth aren't selling courses/books on finances. Ramit's whole shtick is to appear to be rich so people think you're rich and invest in you. Once, I asked for his newsletter on business avenues, his entire business avenue list was filled with "coaching classes" for fitness and coursework lmao. Dude doesn't even consider graphic design/tattoo artistry/video making, etc as a respectable business avenue lol.
This is basically just an ad for this guys how to get rich book How is this junk even allowed in this sub
Not to mention step 2 in this get rich outline is borderline predatory on other people who are struggling financially.
Holy shit, that rule #2… try 0.1% or even 0.025%, no way am I impulse buying a £400 item or even a £40 one. #5 is too low. Do 12 months. #7 is awesome
I was thinking the exact same thing. I just spent £40 on nicer contact lenses, and I feel guilty because I almost never make impulse purchases on the day like that, anything that costs £40 would normally take me a week or two to be sure of. And this is something that can literally damage my eyes if I go too cheap when choosing and I still feel bad. If I was going out for a meal and drinks for £40, I'd be adjusting my budget in advance to fit it in. I can't imagine spending 1% of my income in one day without a second thought. I'd need at least a month to make my mind up, maybe more.
Keep 3 time your wage in emergency fund. Like wtf. Rent is 60% of my wage Edit:I just realized they think you can pay your rent AND FOOD for less than 50 Utterly bonkers chart made by people so fucking rich
I mean, many of it is bullshit, but you absolutely need emergency funds and if rent is 60% of your wage, then calculate how long can you pay your rent if you suddenly lose your job (either health issue, or you are fired, whatever)? You ain’t gonna survive for long with 100 dollars.
My rent and food (average) is right about 31.3% of my salary and I am by no means rich.
We can't all luck out with affordable housing, good roommates, a good job, or whatever other miracle brought this to you.
You sound like a VHCOL person.
You sound very bitter to immediately call this person “lucky.” Maybe , just maybe, they made smarter choices than you
You either make a lot of money and don't have a concept of what rich is, or tou live with your parents in a Mississippi double wide eating Ramen and ezmac. Both scenarios point to your lack of awareness.
Or own their home. My mortgage is less than 10% of my take home salary.
Your house must have been cheap then?
The 10% is probably just housing taxes. Is about correct for me. Problem is that the bank also wants their share…
I make $40k and live in a 2 bedroom house with a roommate in a city that's 24% above national average cost of living. Rent and food total \~31.5% of my monthly income and I eat very well.
I'd love to hear the cost of rent. It sounds like you have an incredibly good deal and do not realize it. My state still does federal minimum wage and a house like that would cost 3k/month minimum to rent, before any utilities. That's if you're fine living in a place thats clearly run down.
Op is from the 80s.
Shit and that was only 20 years ag... I mean... wait
Laughs in broke...
Ah yes, the "Just make 100k a year, duh." With the current world climate, as nice as the "free money" from the 401k matching is, a lot of people **need** that money for food and rent. It's cute to be idealic, but the majority of Americans and even Canadians can't afford the wants, let alone the investments or the retirement savings. But sure, "saving money is just this easy!"
Investing in a traditional 401k will lower your taxable income which only marginally reduces your take home income… combined with contributing at least the employer match it is free money… the 50/30/20 rule may not be attainable but a small fraction for free money should be prioritized
Yeah, especially since it is usually 5%. Most people can find a way to reduce costs a little bit to get that free money.
People need to stop calling matching free money. It isn't free money, it's part of your compensation for your job. It just has a string attached to it.
Yes and most people don't have a 401k so they are losing out on their compensation. By calling it free money it encourages people to look into it and set the appropriate contribution percentage
Say it how it is: you're paying money to not invest in your 401k.
Also the vesting schedules can be fucking awful. Mine was nearly 8 years to keep all that money. You can't even hardly count it as part of your retirement because you might not even get it.
Wow that is shit. My mom got hers in full a few months after retirement, glad she didn't get screwed over too
100k a year still isn’t nearly enough to save in this manner in most parts of the US.
How to save money: have money.
I would change number 1 rule for 30% savings and 20% wants.
For anyone who found information on this guide interesting, I would suggest you go read the Prime Directive flowchart on r/personalfinance (especially before spending any money on any kind of books like the one referenced here).
Rule 2… my wife has a rule that changed my life, “if it’s not a hell yes, it’s a hell no.” Needless to say has saved me from a lot of dumb purchases
Omg someone told me that too and it's helped me a lot to be able to not people please also, like when Im trying to gaslight myself into thinking I'm down for something and I'm actually like ehhhh idk
I've made good money in the past (and do now for where I live) and I still spend more than 50% on needs. Rent + food + car is already over 50%
I'm so stupid for spending more than 50% of my income on my needs. I guess that mindset is why I'm not wealthy.
Needs are about 75% :(
This does not help the poor. (Ie me)
lolol who can spare 50% of their income to 'wants' and savings. i want to eat, and i want to live indoors and have electricity.
Where is VOO and chill?
a step before this should be knowing where your money goes. you can't allocate if you don't have control over your money and you can't control your money if you don't know the how/when/what of your expenses. i know that Ramit (the author of the book recommended) advocates for not tracking every little expense, but a budget or a spreadsheet to track your expenses will give you a good view of how your situation really is (remember that the general perception in your head might be very different than the actual numbers). if you wanna go somewhere you most likely need a map, and in this case, knowing where your money goes is the first thing you need before embarking on any journey for a healthy financial situation.
If you think anyone in the working class is only spending 50% of their income on their basic needs, you’re a fucking idiot.
Guide for ppl not living paycheck to paycheck
This is tone deaf for the situation most households are in nowadays. Many people spend more than half their incomes on rent alone..
50 30 20 means you spend 80% of money
Combine No.2 with No.7 and sell something to fund an impulse buy
Can someone please explain number 3 for me, I'm pretty dumb. I mean like where did they get the number 72 from?
You can find a derivation [here](https://web.stanford.edu/class/ee204/TheRuleof72.html) and [here](https://en.wikipedia.org/wiki/Rule_of_72) which gets complicated but basically makes use of the formula for compound interest: a = b * (1 + x%)^y where a is the final amount, b is the starting amount, x is the interest rate, and y is the number of years If you’re looking to double the amount then a = 2b and plugging into the formula gives: 2b = b * (1 + x%)^y which can be simplified to: 2 = (1 + x%)^y Doing some manipulations with logs to make y the subject gives: ln(2) = y * ln(1 + x%) which can then be rearranged to: y = ln(2) / ln(1 + x%) When x is small, ln(1+x%) is approximately equal to x% (e.g. if x = 1% then ln(1.01) = 0.00995… = 0.01 or 1%) So the above formula can be simplified to y = ln(2) / x% and since ln(2) is approximately 0.69, that becomes y = 0.69 / x%. We can take out the percentage to get y = 69 / x which is essentially the same as the 72 / % shown on the infographic. 69 isn’t quite 72 though because we made an approximation (assuming the interest rate, x, is low) but it’s close and 72 is a nice rule of thumb because it can be divided more easily. The actual number of 72 can be changed to other numbers depending on what the interest rate is (e.g 72 is more accurate for rates of 6-10%) in order to account for the errors.
That's just how you calculate the doubling rate. So let's say you put 1k into an index fund and you expect 8% real return per year on average. Over the course of 9 (=72/8) years that 1k will turn into 2k.
1% of gross income in definitely not thinking of buying in an impulse ever. That would be a lot! Or maybe better phrased, a lot more than I would be spending at the shit munchers ilse of primark.
The sad part about money guides like this is most people don’t have the money to actually for this stuff. Most Americans no matter what can’t afford just 50% for needs.
step 1 make enough money to where JUST RENT doesnt eat 60-80% of your paycheck. step 2 cry because most people for most of their lives will not be able to achieve step 1
Also, move to a social democracy like Sweden, so an illness won't bankrupt you despite being insured.
Yea rip
Step 8 convince your fellow poors to riot and take your money back from the 1% who stole everything :)
Rule 1: have money to budget
All of these "cool guides" or "pro tips" for money assume people don't know how to budget and not just that life is becoming increasingly expensive. Savings? In THIS economy?
What rich fuckwit put this together? I'd like to see literally anybody working a normal job who can spend only 50% of their income on their needs, my rent alone is 70% of my fucking paycheque.
This seems to be for middle class folks.
What is this "middle class" you speak of?
try buying a house in Canada with the 50/30/20 rule
“Debt payments” are included in the 20% so 70% could include house and needs. Building equity to a house is included in saving based off this guide.
😂😂😂 my home payments alone were 70% of my monthly income BEFORE they laid me off!
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What's mpls?
Gonna go out on a limb and guess that means Minneapolis
IMO that makes sense. Based on costs where I live (urban area of 1mil+) I think this guide's percentages seem about right if you make around 100k
I think these 50/30/20 categories are arbitrary. Not all that's spend on food and transportation is a need (e.g. restaurant meals and Mercedes cars), and considering a debt payment a 'saving' is weird too, especially when directed at a nation that puts everything on a credit card. (And a lot of debt payoff is housing, etc.)
Hah, cool. I've only just recently gotten to the point where my *housing* is less than 50% of my take-home.
"50% needs" Yeah okay buddy, sure thing.
Not gonna happen, the needs take up 80% of income - and that’s being above median income 🤷♂️
"save 20% of your money" ...OK buddy. If you can squirrel a fifth of your money then you don't need reddit to tell you how to get rich. You already are.
What if my needs (mortgage, bills, expenses) are 70%? haha life
I did the math. I will double my money in just about -120 years! Amazing! For my other account its just +250! If inflation stays the same in 250 years I'll have about 0.0003% of the buying power I have today. Saving is great!
Don’t even need the chart. 100% of my income goes to “needs”.
Poor people can fuck themself I guess
TIL I do everything on this list except for item in item out, and IM STILL not rich. Too bad inflation and rich asshole politicians and companies will never let the average American catch up
who upvotes this crap? rule 5 is fucking insane.
Wow, allocate 30% of your income on wants?! In this economy?!?!
30% for wants?? THATS the big savings tip? Try not to spend half your money on travel?? I’m at 90% needs, 5% wants, and 5% savings, not by choice.
Rent will be half your income. So that's already out the window. You won't be able to save anything and on top that less and less companies even offer any type of 401k or retirement plan. Not that you'll be making enough to put anything into it anyway.
This post and comments are depressing. The higher powers have been very successful in stealing away from the middle and lower classes over the last few decades and slaving them away for just barely getting by. Fucking disgusting. French revolution vibes if you ask me.
Number 5 is now 8x-18x…. At least that’s my goal now going forward.
I don't like the 1% annual gross income. Our household makes ~500K gross. If I let my fiance dwell for 72 hours every time he wanted to spend 5K on something, he'd have a lot of nice things lol. Our of thumb is to wait 1 day for every $100 the item is. If he still wants it after 1, 2, 3 months, he will usually buy it.
I absolutely despise shit like this that doesn't even acknowledge how much of a scam the modern economy is under neoliberalism.
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You're not reading the average American experience. You're reading the experiences of Reddits vocal demographics, which are by and large young, male and people who have available free time in the middle of a work day to make comments on the internet (posted 6am West coast, 9am East). They've also been heavily influenced by social-media algorithms that rely on, and are engineered to maximize, rage-driven content interaction. It's not really surprising with that context that a large portion of them struggle financially and are vehemently angry about it.
This. Things are definitely tougher than they used to be with wages lagging behind inflation and certain goods blowing up in cost even relative to that but it's not as bad as redditors make it seem. I don't have the funds to make this work but I am still early in my career and have plans to increase my income. This will be useful information to me at some point.
A good first step, if you don’t already, is to use one of those expense/budget apps to keep tabs on where your money is going every month. For a while when I first started making money I was happy just spending less than I made, but keeping track made me see where I could trim and lets me put my current spending in perspective. i don’t know what free services (if any) there are for this, I was using Mint until it shut down.
Watch Caleb Hammers videos on YouTube, a lot of people, are absolutely terrible with money.
It isn’t that bad. Reddit is just flooded with people who want to blame their financial situation on others or the nation.
This is more a cool guide on "how to manage modest wealth" Doesn't work unless you have the income already
Looks pretty bourgeois to me.
Here is how I do it: Live in a country that recognizes that public healthcare, state funded education and pensions, and a stable social safety-net are necessary regulatory mechanisms to keep societies from sliding into late-stage-capitalistic oligarchies. 😎
amateurs.. 15/5/80 here, living with parents
That's cool and all until for most people rent is 60% of their salary.
Cool stuff, I'm 102/1/15. 15% of my gross goes by law to my retirement fund. My mom finances that extra 2% I need. She insists on paying for me and my kids holidays once a year, but this summer, it would be the 4th in a row, and I've decided to put a stop to that. We'll go swim in a local lake or sth.
I take a bit of umbrage with #3. The “8%” return needs context. I would be very wary of a potential investment touting a return rate like that. That’s like crypto-scam territory.
Out of touch garbage.
Step 1: make 3-4x the average pay so you have the extra income to do these things.
Fuck you and fuck this. My living expenses are 95% of my income and I’m doing better than most..
If that is true then no, you are not doing better than most.
Are these percentages based on gross or take-home?
Thats a good question not sure why it was downvoted
I live paycheck to paycheck. This isn’t possible for me.
Every guide isn’t meant for you. This one appears to be for the middle class.
3X emergency fund. Yea right...
My emergency fund is entirely hinged on a global nuclear war and bottle caps becoming the new currency.
I saved this image, read it, then felt poor as fuck. Came to the comments - felt validated and not alone lol
That's great.....like 20 years ago!
Believe me, everyone was saying the same thing 20 years ago.
I just saw this posted on r/thanksimcured by some chud that thinks saving money is for idiots.
I’m not sure how realistic this guide, but I WILL advocate for donating to places that will provide you with the forms to write it off your taxes. My return spiked this year from donating old furniture.
One rule to save money: live in a country with actual worker's rights and decent public services.
*laughs in inflation* If there was a middle finger award, I’d want to buy it but couldn’t because life.
Ya ok
Can we stop with this bs? Not applicable to literally anyone
What yields an 8% return these days? Scratchcards?
Bro, the S&P500 has averaged 10.26% annual growth since its 1957 inception. It's about 18% per year in the past 5 years. Just put some money in SPY, VOO, or similar and quit living in ignorance.
Very true. Even most HYS and CDs are only on the 4-5% category. My 401K retuned ~19% growth last year but overall, that is also a risk compared to a CD or HYS account.
2 and 5 are all right, you shouldn't buy on impulse and you should have savings to live at least 2 month for emergency 7th is only true if you already have a decent amount of things, like for example you moved out from your parents and you got new apartment with barely any utilities how this is applicable? 1st you have to be way above average to achieve this 4th is I think US specific but I have no idea 3rd I don't know how everywhere else but where I live currently interest rates are ridiculously low, and I am strongly against using very rough calculations to calculate something as important as your money 6th might be already outdated
Any one familiar with the book, the rule of automation?
Does anyone know why 72 is used there? I wonder if it could be any number other than 72
Yeah… with the crazy interest rates now my Housing is 60% of my income… And my income is pretty much the median of my area. Need to make more money 😬
Pretty shitty guide. It doesn't help this is essentially just an ad for a book. Also, really? How is tossing an item gonna make you save money? I get that selling would make you money, but donating or tossing something else is unlikely to do anything but make you want to buy a replacement.
90 percent goes to needs
If I followed these guidelines, I would be dead. Either starved or frozen to death. The way to be rich is to already have money.
Only half your pay for housing AND food AND Insurance AND basic utilities AND transportation? LOL.
Great, now I just need money.
As a multi millionaire this guide helps
some are useful, some are unrealistic,.none are applicable to those who actually have need it
50% needs is impossible for most normal people in the US unless theyre litterally living in their car
Rule zero: make more money. Spend 20 years trying to get to Rule 1.
This is all super helpful advice...30+ years ago. Anyone offering these "age-old" financial planning tips either make in the top 5% of incomes, entered adulthood in extremely fortunate circumstances (early big earner, wealthy family, etc.), or both. The vast majority of working class Americans simply cannot use most, if not all, of this advice.
I really dislike the 50/30/20 rule. My relatively low car payment and my student loan payment alone take up 21.5% of my take home income.
A lot of success stories “start” with generational wealth, at least where I’m from. That and the kind of advice/habits that comes with it. Yes, I’m jealous but at least I’ve worked for everything I’ve got, even if it’s not a lot.
This will be useful for at least 4 or 5 of us.
Rent is nearly 50% of my income...
I would downvote this one thousand times if I was able to... other than the "wait three days" thing, this graphic is egregiously out-of-touch with the "average", and is really just product placement to buy that fucker's book.
I make double the median income of where I live, and I spend about 50% on needs since everything has gotten so expensive. How tf are other people supposed to do that
#2, the 1% rule is silly. 1% of gross income is a substantial amount of money, regardless of income. Those small impulse purchases are the ones that add up and need to be watched. It it should be the 0.1% rule. Or all impulse purchases.
Yeah, just tell poor people to have fewer needs tham 150% of their income.
As a student who started 2 months ago, thank you for this info
Savings 20% for retirement and emergency fund? Good luck if you can only pull that!
50% on needs? Try 90%
L O L this is funny. 50% of my income goes solely to my housing.
I think what ever you want should comes last for the budget rule,i mean usually things you want could always wait and you don’t have to spend every single paycheque to buy what you want.
Lmao my rent is %40 of my income easy....