My rich life.. I just came back from my native country Peru.. gave gifts, dinners in expensive restaurants and stayed in beautiful hotels with my family over there 😊 where my dollar value is 3 times more! We tipped like in America 15-20%. and made the day to tons of people , over there , waiters don’t get tips , just the minimum. That’s my rich life after applying your advice for years 🙏🏻
How do people these days have such a good memory that they remember their dream life.. the only thing I remember abt my dreams is that it was about humans
@@annanay007write it down, and look at it every day, or at least every week. That's the motivation you need to study more, work harder, make more, save more, and spend less... to get you to that dream life. Don't get stuck in the rut of survival. Continue to dream, or you'll stagnate. Best wishes!
Read your book at 60 years old. As a result got aggressive and am now investing and saving 50% of income automatically each month. Trying to create generational wealth. Thanks a million. I really don’t like eating rice and beans and beans and rice every day.
You're eating the wrong beans and rice. It is nutritional, delicious and underrated. If you're saving 50 percent of your income you're gonna have to stick to beans and rice so learn to enjoy it
No rice and beans for us at the moment. I retired at 51 due to health issues and was offered a dream job at 60. It’s 5 minutes from my house and I work with my best friend. My husband and I got our expenses down to around $2000 a month so we are able to save over 1/2 our income at this point. Took a lot of work and dedication but we did it.
I literally just automated all of my bills and card payments (from advice I saw from you last video), I even created an excel spreadsheet to track my spending and debt payment progress, just bought your book I Will Teach You How To Be Rich, and I look forward to continuing to follow your guidance to freedom and my rich life. You are an amazing teacher. Thank you so much for making me realize how much power I can have on my money flow.
The automating bills and payments idea from him, but when I started listening to his book, I realized I was a little too obsessed with the spreadsheet. lol I am learning to have a more relaxed but alert approach to taking control of my finances. I watch many of his videos and started listening to the audio version of his book I Will Teach You To Be Rich. Awesome and practical advice. @@JohnHei-zx6rk
I really like Ramit’s philosophy of spending more on the things that matter to you, and cutting costs on the things that don’t. However, I will quibble with one specific number: 10% towards investments. If you want to work until you are 65 and only have barely enough invested to retire comfortably (but not lavishly), 10% is probably a fine number. But if you can tighten your spending a bit (particularly just being a bit smarter with housing and transportation), getting the investments percent up to 20+% will open up so many opportunities by building your nest egg way faster.
Me, too. This year I made a New Years resolution to spend more, but I still find myself looking at $20 purchases and thinking do I really need that? But it is nice knowing that if I lost my job tomorrow, I could probably just retire and be fine.
@@stevenspencer306 That is a great resolution! I can relate to your thoughts regarding the purchases. I bought a $20+ item yesterday and was really thinking twice about it. A part of it was also that I am traveling and wanted to make sure that I had space for it in my suitcase. That's good that you could potentially retire if you lost your job. Sounds like you are in a healthy place financially.
@@stevenspencer306 How's your New Year's resolution going? I'm doing slightly better with spending but I still find myself second guessing spending. I often wonder if it is because I am not to the point of feeling comfortable enough to be comfortable retiring, I'm decades off from the time I may consider retiring, but financially I'd like to be further than what I am now and have it as an option even if I don't make that choice. But I wrestle with the question of, when that time does come, will I still feel this way about spending?
@@JohnHei-zx6rk I think you need to find stuff that is "worth". Start with going out and having some beers with friends, maybe go out with your partner and eat once a week at a good restaurant, etc... You can go on a gourmet adventure and try to discover new flavours and plates, or start going to the theater once a week or something. Find experiences, don't go all materialistic... This is currently working for me.
@@stevenspencer306it’s fine to save money on things that you don’t care about, but what *do* you care about? What is it that you want to dial up? For me, I want to just be able to cover a struggling family’s utilities for a year. I want to take all my friends out to a delicious meal that they wouldn’t be able to afford on their own. I want to be a safety net for my friends whose parents can’t be that for them. I drive a 2006 Honda Civic with duct tape on the front and the “civic” sign fell off and lives in our trunk. I don’t need a fancy car. The idea of a $700 car payment makes me SO ANXIOUS. But the idea of being wildly generous makes me excited. What makes you excited? What do you do for fun and how can you do more of it?
Ramit I tell everybody to read your book, listening to your podcast, and watch your show. My sister recently visited and I was pushing your stuff heavy. Your methodologies are life changing and I can’t wait to see how much better my family will be down the line
Dear Ramit! I would like to add something important to your category „fixed costs“: Children! We have four children and I can tell you, they cost a lot between the ages 0 to 18. 😊 And a big compliment: your channel is so great and very inspiring! I love to watch!!!🎉
Excellent point that Ramit missed! Children are super expensive and banks don’t ask about children when applying for a mortgage. I find that so strange.
@@dec1slh some costs for kids (clothes, food, etc.) are indeed variable but for example school lunch, school fees, tuition and sports clubs are fixed costs that you can perfectly budget.
I’m an over saver. I don’t go to enough concerts or vacations. And I’m missing out, I want to enjoy life, save and invest. This is why this year I got serious about learning finances.
Close enough :) Fixed 41.19% Investments 17.75% Savings 8.87% Guilt-free 31.94% Kept my housing cost low. I'm living well beyond my means and status, people who works for me lives in a house that costs at least double of mine. Debt-free in over 3 years, no car repayments. Now I'm trying my best to move some of the guilt-free spending in to Investments
Ramit, I live in Argentina, a country with 25% inflation per month. Despite this, my mind has changed thanks to you and your couples coaching sessions, I wait for your videos with enthusiasm. Watching the sessions I've changed some beliefs and dynamics abt money. Now I am designing my rich life, I'm learning how to play big in this economic rollercoaster situation, the numbers are crazy but the mind is strong. I've made some investments, and encourage to start a project. Financial education and money psychology are the best! Thank you!
I love that he teaches guilt free money for people to enjoy their lives. Love a rich life today and enjoy your money. Too many in PF hammer in a scarcity mindset. I like this. Keep it up, Ramit!
I think it depends. If you're like the average American and have already overspent, and now you're in tons of debt - on vehicles, on credit cards, on student loans - then until you catch back up, get out of non-mortgage debt, fill up that emergency fund, contribute to your 401(k), you should really cut those financial losses and stick to the basics for the most part. Maybe 5-10% at most on the guilt-free spending. I wouldn't say zero because I don't think it's sustainable and can lead to an overcorrection where you splurge like crazy on all the wants you've been depriving yourself of. But it definitely doesn't make sense for everybody in every situation to budget such a huge amount of money to fun.
@@isaiahayers1550 5-10% is too low. The point is balance. For people who need to get out of debt go to Dave Ramsey. If they want build wealth when they get out of debt, find mentors and learn how to invest including Ramit. I didn’t do any of what Ramit says and became a millionaire by paying off debt, setting up all bills on autopay, setting index fund investing on autopay and buying real estate. I enjoyed the rest and used technology to manage my money. To be fair I also have a high earning w-2. I am not a bean counter and I appreciate that he speaks to my crowd. We can be responsible and enjoy our money. I don’t work this hard to only enjoy 10%. Personal finance is personal and everyone has to do what’s best for them. Cheers.
I love this fresh perspective, Ramit! However I want to soft retire a decade (or more) before traditional retirement age so I think that skews a lot of these percentages. There's a direct correlation between the amount I save and the age at which i can soft retire. Therefore, I don't believe in oversaving. I live in my spreadsheet, save every penny, and geek out at watching my net worth grow, all the traits you poked fun at in this video. However, I absolutely love doing it this way. I still watch you videos and enjoy your alternative perspective on the matter. Thanks and keep it up, just wanted to share my perspective.
Hubby and I recently decided we will be renting for a some time. We love how comfortably we live, and we refuse to stretch ourselves thin by throwing money down the drain through mortgage interest and yet paying through our nose on monthly mortgage even WITH a decent deposit. We are able to rent our home for LESS than a monthly mortgage with a 30% deposit would cost (the monthly interest is makes up literally 1/2 the monthly mortgage). Insanity. We will use our normal 30% savings and also the savings from NOT paying interest in the market and eventually simply buy our dream home CASH or at worse, put 60% down and pay the rest >10 years. In the meantime, our comfortable life continues.That's a rich life to us. No stress, no worries, accumulated wealth and not paying the banks exorbitantly for no reason.
I LEARNED GREAT THINGS AND WISE THINGS FROM YOU! It's okay to spend money on important things in life. Life goes by in the a blink of an eye. I agree to enjoy our money responsibly.
Recently went through a divorce and was left with paying the full load for my children. My fixed costs are absolutely insane right now (87.5%) but I am literally supporting 3 households on one person's income. I do at least take advantage of my company's 401k match and deposit 6% of my income into my index fund. I work 3 jobs plus side hustles and I thought I was doing ok. These numbers showed me I'm not. What a crazy wake up call. My goal now is to get fixed costs down and build up an emergency fund. Wish me luck.
I will listen to your book this weekend in addition to many I have already! Just to mention I have already listened/ read over 15 financial freedom books and many more hours of podcasts. I can finally see everything in much better colors. Emergency Fund ticked. Pension saving automated (£250p/m). Investment automated (£100 per week or 20%). Credit card and bill payments are automated and paid in full and on time so no interest. Need to work on not looking at them every day. But will overcome that too soon. Lastly hope to learn how to spend on myself guilt-free, big ask just now but hey hope this will come too.
I dont penny pinch, but I dont spend much. Im an over saver because I'd save to pay cash on everything except my mortgage. My guilt free is 15% giving/charity and 10% on myself. I find charity very fulfilling, and it aligns with my purpose. I'd rather give than take or treat myself (Im wired that way). Be blessed to bless others.
Interesting point about housing costs as a percentage of your income. I'm France 90% of landlords will not rent to you of rent is more than 30% of your income, and it is illegal for banks (with some small exceptions) to give you a mortgage where your monthly payments are more than 30% of your income.
I have never heard about your book but I'm very happy to have stumbled upon your channel. I am about to be free from paying the mortgage on my house in August and have started to research about how to grow the money that I will be freed up from.
Ramit, reading your book & currently on chapter 4 - I’ve set up my budgeting strategy with relevant pots + about to open a vanguard managed ISA stocks & shares where they manage it for me & I don’t have to worry about anything other than the money that I put in (I thought this was only a USA thing, I feel so stupid 😂). I have 0 debt other than my student loan & I already feel like I’m in power over my money even though I have yet to finish your book in full. I bought it for 99p on my Kindle - probably will give me the best ROI ever! Thanks for the incredible content 👍👍
@@excitedaboutlearning1639Thanks man, I saw they mentioned that! I think it totals to 0.60% to handle everything -> honestly more than fine with that, as I then won’t have to worry about anything other than putting the money in!
@@NM-hq1iothat's WAY TOO MUCH. Doesn't sound like much but it really is. Never, ever pay a percentage of your A.U.M. There's just gotta be a better way to let your dollars grow where you're just charged a small fee. In fact, Ramit has mentioned never letting a financial planner/advisor charge a percent of Assets Under Management because it robs you of insane amounts of money.
Im no millionaire, but growing up poor put me in a mindset of hoarding cash and always feeling guilty for spending on little things. You’re ideology of “guilt-free spending resonated so well, because like a skill, i had to work and develop my ability to spend on things for myself, and get gifts for others, without feeling guilty like i was burdening future me with poverty. Great vid and message. These 4 tenants are really all we need for real!
I went on a fabulous 2 hr horse trek then for lunch,, totally guilt free as I'd filled my other pots abd knew i could afford it. Thats new for me!!! Thanks Ramit!
Thank you for the video!! Here are some other thoughts you might like: My personal philosophy has 20 beliefs I strive to live by: 1. “Love is the only rational act.” -Stephen Levine 2. We are all teachers, we are all students. We grow and evolve together. 3. Nothing about me, without me. 4. “Make Life Beautiful” from the song Beautiful by Storm Large 5. "Work is love made visible." -The Prophet by Khalil Gibran 6. I can like you, even though I am not like you. We are equals even though we are not alike. -inspired by the book A Wrinkle In Time. 7. The Universe provides. 8. Pain is (often) ignorance leaving the body. -paraphrased from the Tsunami Rangers 9. As you are art, so am I. 10. “Joy is the gift of love, grief is the cost of love, anger protects your love.” -Valarie Kaur 11. “That which is moral is that which feels good, (during and) after.” 12. If you don't heal from those who hurt you, you will bleed on those who didn't cut you. 13. "You can ask for anything in the world that you want, as long as you are willing to accept no for an answer." -Steve the Hippie 14. “Sit with reason, move with passion.” -paraphrasing Kahlil Gibran from The Prophet 15. “Those who have a 'why' to live, can bear with almost any 'how'.” -Viktor Frankl, 16. It doesn't have to be fun, to be fun. -from an unknown rock climber 17. We live in a world where anything is possible. 18. There is pretty much just one question in life to answer, and that is, how do you want to spend your time? -my step father Paul 19. The best way to predict the future, is to create it. -Peter Drucker 20. If you want something you've never had, you gotta do some thing you've never done. -Carlos Anderson, the Minister, from Hope Church
Our fixed cost is less than 10% of our take home. Drive a company car and live in a cash purchased house. Property tax and grocery are two biggest expenses.
It’s amazing we are here to learn about how to be rich, and when someone does it, they are shamed by everyone else. Congrats to you! I hope to get where you are at.
Hmm I actually separate fixed fixed costs from fixed discretionary. The first one is unchanging month to month and I review twice a year to see if I can improve thay. Fixed discretionary like electrical, gas, groceries , is the one I watch a bit closer so I can decide earlier if I need to make adjustments. Car maintenance, repairs, registration, comes out of a yearly budget I have for those...
Great video, doing financial counseling I see the exact same thing you do, when it comes to housing expense alone people are running about 35-40% of their income just in the cost of rent. Currently one-bedroom apartments go for about $1400 and two bedrooms about $1800 which based on wages falls in line with that percentage. When I add in the car payment/insurance/repairs we are at or above the 50-60% that does not even get into the grocery expense!
Childcare is the thing that blew up our fixed costs up. While we knew kids would increase our fixed costs and planned accordingly, it is still surprising *how much* it really costs. Our monthly daycare invoice is twice our mortgage, homeowners insurance and taxes included! Side note, love your book. I read it 5+ years ago and it really changed the way my husband and I manage and think about money. We suggest it to everyone!
I'm definitely an oversaver (or shall I say under spender). I recently did my first budget with 10% savings, 10% Investments (technically it's 20% investing since 10% of my net pay is automatically removed from my paycheck and I invest manually 10% post-tax) and 20% Spending, should be interesting to see how that will work out for me. I agree with Ramit that there's no point in hoarding money while living and doing nothing with it at all even if I can afford to. If I struggle to spend on anything now, there's no reason that I will later on in life either. Can't wait to experiment with the Conscious Spending Plan budget spreadsheet.
very inspiring video. I have recently changed my mindset from instant gratification(ie spending on kak) to paying off debt. I have turned things around, planned the next 10 years money wise. Based on my current plan will be debt free within 2-3 years, and the surplus will be funnelled into retiring early(circa 60). have also subscribed to this channel and your podcast, keep up the great work
Best video yet! To me you have been the most impactful voice in the personal finance community, the money psychology aspect is so crucial. Have read the book but am loving the video content.
I pay all my important things and then whatever is left i say is my play money. I've been able to make huge progress on my student loans and will be done with them by the end of the year while still having money to do fun things and shop
Thank you for what you are doing Ramit! The way you show that not buying a house and how to look at personal finance has improved my aspect about money. Everyone wants to make more money but not many people (myself included) knows how much is enough and what is the purpose of saving and earning more? Now I start to break down my number each month and slowly apply your method, it will take time for me to absorb all of your knowledge but I will be patient. Also, I just finished you Netflix series, they are awesome and very knowledgeable.
3:40 What americans spend on eating out/ ordering door dash is amazing. I think it's because you don't have time to cook, you spend all your time working and driving. You should batch cooking and freeze it though, you'd save sooooooo much money. 200-600 a month adds up.
I have to pay my health insurance myself and pay for day care. These two positions are 1000 Euro per month. Housing is less than that. I live in Germany and have private health insurance and two kids.
TOTAL! You factor it all in, adding a nice buffer. Given enough time, they don't fluctuate that much -- you can even factor in a roof repair 13 years from now by dividing the approximate amount by 156 months
I’d suggest adding a 1-10% donation to this list. It allows you to contribute to making the world a better place, and also reducing your paycheck by that small percentage encourages greater financial responsibility with the remaining amount.
My mortgage is too expensive. But I had just sold a house and made enough to easily put 40% down on the new one (I put 20% and invested the rest). It's not been super fun. My savings was much more powerful than my income, but as a result, I'm now getting an MBA and pushing myself to earn more to fix it. At least I have no other debt and a very inexpensive (read "I'm really cheap") lifestyle other than that.
Hi, may i know how to know or categorize the 'trip' in saving and the 'vacations' in guilt free spending you mentioned, should in just savings or guilt free spending? Aren't those are the same/similar things?
This doesn't accommodate when fixed costs are high and genuinely can't be lowered. (Committed lending) We drive a 13 year old Ford Focus we bought outright for 2500 and live in an energy efficient house with a really cheap mortgage (400 a month - lots of equity). We budget carefully for food. There is little left over every month for overpayments, saving or investments and no scope for a meaningful pay rise in our industry (government).
Hey...Ramit you really changed my perspective on money and life... Thanx for all your insights and wisdom... I have my own business and it's been tough the past few years but you gave me new hope.... Just wanted to know I'm from South Africa and I want to invest in the S&P 500 how do I proceed because Vanguard won't let me join since I'm not an Amercan citizen... I really want to invest in the more stable markets and I don't trust these sneaky brokers and companies... they're not here to help me just in it for themselves please advise... Thanx again for all that you do for so many people
Thanks Ramit! Very good video. I will try to save more instead of investing it all. It is indeed a good feeling to be able to spend some money on things you like also. Life is very short, we all have to enjoy it now we can. ❤
Hah--felt called out by the last portion. Previous job had my finances in a spot to do ~20% savings, occasionally 30%+ light spending months. Got a new job with 85% raise, but was like "no lifestyle creep" and have sat on a 50%-65% savings rate for nearly 2 years now. Realized at some point along the way and created a separate savings account to earmark money set aside to spend on literally anything even if I don't have much to spend it on today as a frugal person who is satisfied with what I have. It's helped, but not fully; good to have that separate pool of money that says "under no circumstances should this be put into something for long term savings."
Watching your show on Netflix and now following you on social. Best part I like about your method is the Guilt Free Spending!! About time we hear about actually enjoying your life too!!
I’m one of these oversavers, it’s honestly really hard I guess like actual guilt and can’t stop thinking about spending things. Like why is it so hard from me to enjoy myself. Constantly have my mom in the back of my head saying money is hard to come and quick to go out save your money.
This is very common. If you want to change the way you look at money, talk about money, and behave with money, join me in my Money Coaching program (iwt.com/moneycoaching). We talk live every month about money psychology.
started investing at 42 ive got 4 indexs now amd put at the least 740 a month between them not equally though but ive got my own system i was literally inly saving my moneys in a credit union only 🤓
Ramit, your videos are getting better and better. But you never mentioned about how to 'protect our wealth' via getting the right types of medical & life insurance. A video on it soon, perhaps? - subscriber from Malaysia
when you say "total take home pay" are you adding back in any retirement plan contributions you make? if i am putting 12% of my pre-tax salary into my 401k, should that count as take home pay for the purposes of your budget calculations?
What’s confusing is that our mortgage (including a generous amount for phantom costs) is 30.7% of gross income (actual mortgage+escrow which includes PMI, homeowners insurance, and property taxes is just over 19% of my gross income, we have no debt and drive a 2006 Honda Civic we bought with cash, but our fixed costs are like 85% of our take home pay. Our rich life includes us having been very conservative with our mortgage so we’d have job flexibility, but on one income, we can barely save for our “true expenses” (long time YNAB users) like holiday gifts and car repairs, let alone vacations or guilt-free spending. Here’s hoping I get a fat tax return next March, otherwise, where’s the money??
After watching this video I started to question myself about over-saving/over-investing. I started saving/investing in my thirties, and because of not starting earlier I believe that I have to compensate for all the time lost while feeling fearful that everything I do for now on won't be enough to guarantee my retirement. How can I deal with this feeling of uncertainty and fear that no matter what I do it's not enough?
I love this video. Super simple. When calculating the % of the costs, I am assuming its after tax right (i.e take home money?) Also do you use a particular app to track or you recommend the digital banks which have smart categorisation?
Question, it's June and we have already maxed out our IRAs, we divided 14,000 by 12 months and put that number into post tax investments. But after watching this, we already have that number in our "assets" Correct?
Ramit, what is the denominator? Is it pay before any taxes, ss, Medicare, health insurance, 403b etc. or after all that is deducted (which is close to 40% less)?
I have been saving quite a bit to the point that I started to feel guilty spending money. We have a system where we have cash when we go on vacation. We have cash and it’s guilt free spending
What about tithing? Is that fixed income? And what if my retirement contributions come out of my gross pay, not take home? How do I calculate that? Love your advice and just realized I might need to ease up on the savings. I am at 19%
For me, it still helps to know what prices groceries are. Groceries have inflated in price of nearly 25% since the start of the pandemic. This coudl be $1,000 to $2,000 more per year.
Wonderful insights and vision. People tend to follow the income inflation trap (adding more costs to their household when they start to earn more). This will not help to become financially free.
What was I doing wasting my time in the womb! I should’ve been investing. - showcases that it’s never too late to start investing because all of us are late.
there's a book called whispers of manifestation on borlest , and it talks about how using some secret tehniques you can attract almost everything in life it's not some bullshit law of attraction, it's the real deal
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My rich life.. I just came back from my native country Peru.. gave gifts, dinners in expensive restaurants and stayed in beautiful hotels with my family over there 😊 where my dollar value is 3 times more! We tipped like in America 15-20%. and made the day to tons of people , over there , waiters don’t get tips , just the minimum. That’s my rich life after applying your advice for years 🙏🏻
Beautiful!
How do people these days have such a good memory that they remember their dream life.. the only thing I remember abt my dreams is that it was about humans
@@annanay007 they live it everyday, so not much to remember ;). Rich life, at least a far as I'm concerned, is a habit, not a goal.
@@annanay007write it down, and look at it every day, or at least every week. That's the motivation you need to study more, work harder, make more, save more, and spend less... to get you to that dream life. Don't get stuck in the rut of survival. Continue to dream, or you'll stagnate. Best wishes!
Read your book at 60 years old. As a result got aggressive and am now investing and saving 50% of income automatically each month. Trying to create generational wealth. Thanks a million. I really don’t like eating rice and beans and beans and rice every day.
Inspired!! You got this friend 🫶🏻🤍
You're eating the wrong beans and rice. It is nutritional, delicious and underrated. If you're saving 50 percent of your income you're gonna have to stick to beans and rice so learn to enjoy it
No rice and beans for us at the moment. I retired at 51 due to health issues and was offered a dream job at 60. It’s 5 minutes from my house and I work with my best friend. My husband and I got our expenses down to around $2000 a month so we are able to save over 1/2 our income at this point. Took a lot of work and dedication but we did it.
What you do not like the Dave Ramsey diet!
@@goldgeologist5320😊😊😊😊😊
I literally just automated all of my bills and card payments (from advice I saw from you last video), I even created an excel spreadsheet to track my spending and debt payment progress, just bought your book I Will Teach You How To Be Rich, and I look forward to continuing to follow your guidance to freedom and my rich life. You are an amazing teacher. Thank you so much for making me realize how much power I can have on my money flow.
Sounds good! Can you please share which video you got the advice from. I am new here and that sounds great.
The automating bills and payments idea from him, but when I started listening to his book, I realized I was a little too obsessed with the spreadsheet. lol I am learning to have a more relaxed but alert approach to taking control of my finances. I watch many of his videos and started listening to the audio version of his book I Will Teach You To Be Rich. Awesome and practical advice. @@JohnHei-zx6rk
@@JohnHei-zx6rk likely this one ruclips.net/video/LhrGOKmqam8/видео.html&pp=gAQBiAQB
In all my years on this planet, I've never had my name used as a persona in an example before. Thank you Ramit, I feel seen.
I really like Ramit’s philosophy of spending more on the things that matter to you, and cutting costs on the things that don’t. However, I will quibble with one specific number: 10% towards investments. If you want to work until you are 65 and only have barely enough invested to retire comfortably (but not lavishly), 10% is probably a fine number. But if you can tighten your spending a bit (particularly just being a bit smarter with housing and transportation), getting the investments percent up to 20+% will open up so many opportunities by building your nest egg way faster.
Frugality Freak, here. I needed to hear this message. My net worth is steadily growing and I'm still struggling to spend.
Me, too. This year I made a New Years resolution to spend more, but I still find myself looking at $20 purchases and thinking do I really need that?
But it is nice knowing that if I lost my job tomorrow, I could probably just retire and be fine.
@@stevenspencer306 That is a great resolution! I can relate to your thoughts regarding the purchases. I bought a $20+ item yesterday and was really thinking twice about it. A part of it was also that I am traveling and wanted to make sure that I had space for it in my suitcase.
That's good that you could potentially retire if you lost your job. Sounds like you are in a healthy place financially.
@@stevenspencer306 How's your New Year's resolution going?
I'm doing slightly better with spending but I still find myself second guessing spending. I often wonder if it is because I am not to the point of feeling comfortable enough to be comfortable retiring, I'm decades off from the time I may consider retiring, but financially I'd like to be further than what I am now and have it as an option even if I don't make that choice. But I wrestle with the question of, when that time does come, will I still feel this way about spending?
@@JohnHei-zx6rk I think you need to find stuff that is "worth". Start with going out and having some beers with friends, maybe go out with your partner and eat once a week at a good restaurant, etc... You can go on a gourmet adventure and try to discover new flavours and plates, or start going to the theater once a week or something. Find experiences, don't go all materialistic... This is currently working for me.
@@stevenspencer306it’s fine to save money on things that you don’t care about, but what *do* you care about? What is it that you want to dial up? For me, I want to just be able to cover a struggling family’s utilities for a year. I want to take all my friends out to a delicious meal that they wouldn’t be able to afford on their own. I want to be a safety net for my friends whose parents can’t be that for them. I drive a 2006 Honda Civic with duct tape on the front and the “civic” sign fell off and lives in our trunk. I don’t need a fancy car. The idea of a $700 car payment makes me SO ANXIOUS. But the idea of being wildly generous makes me excited.
What makes you excited? What do you do for fun and how can you do more of it?
Ramit I tell everybody to read your book, listening to your podcast, and watch your show. My sister recently visited and I was pushing your stuff heavy. Your methodologies are life changing and I can’t wait to see how much better my family will be down the line
Thank you!
Dear Ramit! I would like to add something important to your category „fixed costs“: Children! We have four children and I can tell you, they cost a lot between the ages 0 to 18. 😊 And a big compliment: your channel is so great and very inspiring! I love to watch!!!🎉
Op wouldn’t this be considered a variable expense?
Excellent point that Ramit missed! Children are super expensive and banks don’t ask about children when applying for a mortgage. I find that so strange.
How TF can you factor a fixed cost for Children. I mean whatever you are spending on your children would fit into the other categories
@@dec1slh some costs for kids (clothes, food, etc.) are indeed variable but for example school lunch, school fees, tuition and sports clubs are fixed costs that you can perfectly budget.
Can’t agree more, activities and classes cost more than $1000 a month for 2 kids
I’m an over saver. I don’t go to enough concerts or vacations. And I’m missing out, I want to enjoy life, save and invest. This is why this year I got serious about learning finances.
How is your progress? Very interested
I am very glad I found you! I’ve been needing a mentor for a very long time and have not found anyone that resonates with me like you do. Thanks!
Close enough :)
Fixed 41.19% Investments 17.75% Savings 8.87% Guilt-free 31.94%
Kept my housing cost low. I'm living well beyond my means and status, people who works for me lives in a house that costs at least double of mine. Debt-free in over 3 years, no car repayments.
Now I'm trying my best to move some of the guilt-free spending in to Investments
you're doing great hell yea
similar story
Great job. 👍
@@Whitebeardtheking9 thank you brother 🙏 persistence and consistency is the name of the game.
@@musemellow I aim to be on a similar level one day. :)
Ramit, I live in Argentina, a country with 25% inflation per month. Despite this, my mind has changed thanks to you and your couples coaching sessions, I wait for your videos with enthusiasm. Watching the sessions I've changed some beliefs and dynamics abt money. Now I am designing my rich life, I'm learning how to play big in this economic rollercoaster situation, the numbers are crazy but the mind is strong. I've made some investments, and encourage to start a project. Financial education and money psychology are the best! Thank you!
Che boludo!! 😂
Everyone read or listen to his book “ I will teach u to be rich “
Changed my life
It just came in the mail for me a couple days ago, already through chapter 1 :)
I just ordered it coming today
I love that he teaches guilt free money for people to enjoy their lives. Love a rich life today and enjoy your money. Too many in PF hammer in a scarcity mindset. I like this. Keep it up, Ramit!
I think it depends. If you're like the average American and have already overspent, and now you're in tons of debt - on vehicles, on credit cards, on student loans - then until you catch back up, get out of non-mortgage debt, fill up that emergency fund, contribute to your 401(k), you should really cut those financial losses and stick to the basics for the most part. Maybe 5-10% at most on the guilt-free spending. I wouldn't say zero because I don't think it's sustainable and can lead to an overcorrection where you splurge like crazy on all the wants you've been depriving yourself of. But it definitely doesn't make sense for everybody in every situation to budget such a huge amount of money to fun.
@@isaiahayers1550 5-10% is too low. The point is balance. For people who need to get out of debt go to Dave Ramsey. If they want build wealth when they get out of debt, find mentors and learn how to invest including Ramit. I didn’t do any of what Ramit says and became a millionaire by paying off debt, setting up all bills on autopay, setting index fund investing on autopay and buying real estate. I enjoyed the rest and used technology to manage my money. To be fair I also have a high earning w-2. I am not a bean counter and I appreciate that he speaks to my crowd. We can be responsible and enjoy our money. I don’t work this hard to only enjoy 10%. Personal finance is personal and everyone has to do what’s best for them. Cheers.
I love this fresh perspective, Ramit! However I want to soft retire a decade (or more) before traditional retirement age so I think that skews a lot of these percentages. There's a direct correlation between the amount I save and the age at which i can soft retire. Therefore, I don't believe in oversaving. I live in my spreadsheet, save every penny, and geek out at watching my net worth grow, all the traits you poked fun at in this video. However, I absolutely love doing it this way. I still watch you videos and enjoy your alternative perspective on the matter. Thanks and keep it up, just wanted to share my perspective.
Ramit is one of the best personal finance coaches.
Hubby and I recently decided we will be renting for a some time. We love how comfortably we live, and we refuse to stretch ourselves thin by throwing money down the drain through mortgage interest and yet paying through our nose on monthly mortgage even WITH a decent deposit. We are able to rent our home for LESS than a monthly mortgage with a 30% deposit would cost (the monthly interest is makes up literally 1/2 the monthly mortgage). Insanity. We will use our normal 30% savings and also the savings from NOT paying interest in the market and eventually simply buy our dream home CASH or at worse, put 60% down and pay the rest >10 years. In the meantime, our comfortable life continues.That's a rich life to us. No stress, no worries, accumulated wealth and not paying the banks exorbitantly for no reason.
The fact that nobody talks about the book whispers of manifestation on borlest speaks volumes about how people are stuck in a trance
I LEARNED GREAT THINGS AND WISE THINGS FROM YOU! It's okay to spend money on important things in life. Life goes by in the a blink of an eye. I agree to enjoy our money responsibly.
Recently went through a divorce and was left with paying the full load for my children. My fixed costs are absolutely insane right now (87.5%) but I am literally supporting 3 households on one person's income. I do at least take advantage of my company's 401k match and deposit 6% of my income into my index fund. I work 3 jobs plus side hustles and I thought I was doing ok. These numbers showed me I'm not. What a crazy wake up call. My goal now is to get fixed costs down and build up an emergency fund. Wish me luck.
I will listen to your book this weekend in addition to many I have already!
Just to mention I have already listened/ read over 15 financial freedom books and many more hours of podcasts.
I can finally see everything in much better colors. Emergency Fund ticked. Pension saving automated (£250p/m). Investment automated (£100 per week or 20%). Credit card and bill payments are automated and paid in full and on time so no interest. Need to work on not looking at them every day. But will overcome that too soon. Lastly hope to learn how to spend on myself guilt-free, big ask just now but hey hope this will come too.
I dont penny pinch, but I dont spend much. Im an over saver because I'd save to pay cash on everything except my mortgage. My guilt free is 15% giving/charity and 10% on myself. I find charity very fulfilling, and it aligns with my purpose. I'd rather give than take or treat myself (Im wired that way). Be blessed to bless others.
Interesting point about housing costs as a percentage of your income. I'm France 90% of landlords will not rent to you of rent is more than 30% of your income, and it is illegal for banks (with some small exceptions) to give you a mortgage where your monthly payments are more than 30% of your income.
I have never heard about your book but I'm very happy to have stumbled upon your channel. I am about to be free from paying the mortgage on my house in August and have started to research about how to grow the money that I will be freed up from.
Ramit, reading your book & currently on chapter 4 - I’ve set up my budgeting strategy with relevant pots + about to open a vanguard managed ISA stocks & shares where they manage it for me & I don’t have to worry about anything other than the money that I put in (I thought this was only a USA thing, I feel so stupid 😂). I have 0 debt other than my student loan & I already feel like I’m in power over my money even though I have yet to finish your book in full. I bought it for 99p on my Kindle - probably will give me the best ROI ever! Thanks for the incredible content 👍👍
Be aware that Vanguard charges 0.30% of assets under management per year on their British customers.
@@excitedaboutlearning1639Thanks man, I saw they mentioned that! I think it totals to 0.60% to handle everything -> honestly more than fine with that, as I then won’t have to worry about anything other than putting the money in!
@@NM-hq1iothat's WAY TOO MUCH. Doesn't sound like much but it really is. Never, ever pay a percentage of your A.U.M. There's just gotta be a better way to let your dollars grow where you're just charged a small fee. In fact, Ramit has mentioned never letting a financial planner/advisor charge a percent of Assets Under Management because it robs you of insane amounts of money.
Avoid managed and just buy vanguards global all cap index - I'm up 25% with it atm.
Im no millionaire, but growing up poor put me in a mindset of hoarding cash and always feeling guilty for spending on little things.
You’re ideology of “guilt-free spending resonated so well, because like a skill, i had to work and develop my ability to spend on things for myself, and get gifts for others, without feeling guilty like i was burdening future me with poverty.
Great vid and message. These 4 tenants are really all we need for real!
The only financial advisor that shows you how to enjoy life today AND tomorrow, thank you Ramit you’re the best
🙌
I went on a fabulous 2 hr horse trek then for lunch,, totally guilt free as I'd filled my other pots abd knew i could afford it. Thats new for me!!! Thanks Ramit!
Thank you for the video!! Here are some other thoughts you might like:
My personal philosophy has 20 beliefs I strive to live by:
1. “Love is the only rational act.” -Stephen Levine
2. We are all teachers, we are all students. We grow and evolve together.
3. Nothing about me, without me.
4. “Make Life Beautiful” from the song Beautiful by Storm Large
5. "Work is love made visible." -The Prophet by Khalil Gibran
6. I can like you, even though I am not like you. We are equals even though we are not alike. -inspired by the book A Wrinkle In Time.
7. The Universe provides.
8. Pain is (often) ignorance leaving the body. -paraphrased from the Tsunami Rangers
9. As you are art, so am I.
10. “Joy is the gift of love, grief is the cost of love, anger protects your love.” -Valarie Kaur
11. “That which is moral is that which feels good, (during and) after.”
12. If you don't heal from those who hurt you, you will bleed on those who didn't cut you.
13. "You can ask for anything in the world that you want, as long as you are willing to accept no for an answer." -Steve the Hippie
14. “Sit with reason, move with passion.” -paraphrasing Kahlil Gibran from The Prophet
15. “Those who have a 'why' to live, can bear with almost any 'how'.” -Viktor Frankl,
16. It doesn't have to be fun, to be fun. -from an unknown rock climber
17. We live in a world where anything is possible.
18. There is pretty much just one question in life to answer, and that is, how do you want to spend your time? -my step father Paul
19. The best way to predict the future, is to create it. -Peter Drucker
20. If you want something you've never had, you gotta do some thing you've never done. -Carlos Anderson, the Minister, from Hope Church
Yay to Storm Large
And #12
Our fixed cost is less than 10% of our take home. Drive a company car and live in a cash purchased house. Property tax and grocery are two biggest expenses.
okay mr money bags
is this where we're supposed to applaud you?
You get a cookie.
It’s amazing we are here to learn about how to be rich, and when someone does it, they are shamed by everyone else. Congrats to you! I hope to get where you are at.
@@krazycp did we watch the same video? Go back to @11:37
Hmm I actually separate fixed fixed costs from fixed discretionary. The first one is unchanging month to month and I review twice a year to see if I can improve thay.
Fixed discretionary like electrical, gas, groceries , is the one I watch a bit closer so I can decide earlier if I need to make adjustments.
Car maintenance, repairs, registration, comes out of a yearly budget I have for those...
Great video, doing financial counseling I see the exact same thing you do, when it comes to housing expense alone people are running about 35-40% of their income just in the cost of rent. Currently one-bedroom apartments go for about $1400 and two bedrooms about $1800 which based on wages falls in line with that percentage. When I add in the car payment/insurance/repairs we are at or above the 50-60% that does not even get into the grocery expense!
Childcare is the thing that blew up our fixed costs up. While we knew kids would increase our fixed costs and planned accordingly, it is still surprising *how much* it really costs. Our monthly daycare invoice is twice our mortgage, homeowners insurance and taxes included!
Side note, love your book. I read it 5+ years ago and it really changed the way my husband and I manage and think about money. We suggest it to everyone!
This is a fantastic video which will be helpful for anyone to watch. Kudos, Ramit!
I'm definitely an oversaver (or shall I say under spender). I recently did my first budget with 10% savings, 10% Investments (technically it's 20% investing since 10% of my net pay is automatically removed from my paycheck and I invest manually 10% post-tax) and 20% Spending, should be interesting to see how that will work out for me. I agree with Ramit that there's no point in hoarding money while living and doing nothing with it at all even if I can afford to. If I struggle to spend on anything now, there's no reason that I will later on in life either. Can't wait to experiment with the Conscious Spending Plan budget spreadsheet.
Your advice is so absolutely FREEING! Thank you so much!
very inspiring video. I have recently changed my mindset from instant gratification(ie spending on kak) to paying off debt. I have turned things around, planned the next 10 years money wise. Based on my current plan will be debt free within 2-3 years, and the surplus will be funnelled into retiring early(circa 60). have also subscribed to this channel and your podcast, keep up the great work
I love his methods. I hate saving but with his methods it’s so much easier and I still get to enjoy my money!
Best video yet! To me you have been the most impactful voice in the personal finance community, the money psychology aspect is so crucial. Have read the book but am loving the video content.
Thank you for watching and for the kind words
I pay all my important things and then whatever is left i say is my play money. I've been able to make huge progress on my student loans and will be done with them by the end of the year while still having money to do fun things and shop
“YOU FRUGALITY FREAKS” 🤣🤣🤣🤣 I nearly choked on my lunch 🤣🤣🤣
Thank you for what you are doing Ramit! The way you show that not buying a house and how to look at personal finance has improved my aspect about money. Everyone wants to make more money but not many people (myself included) knows how much is enough and what is the purpose of saving and earning more?
Now I start to break down my number each month and slowly apply your method, it will take time for me to absorb all of your knowledge but I will be patient.
Also, I just finished you Netflix series, they are awesome and very knowledgeable.
3:40 What americans spend on eating out/ ordering door dash is amazing. I think it's because you don't have time to cook, you spend all your time working and driving. You should batch cooking and freeze it though, you'd save sooooooo much money. 200-600 a month adds up.
#4 was a huge challenge for me, but your thoughtful videos are helping me n many others🙏🏿😊🙏🏿😊
I love how animated you get about this topic 😂😂😂😂
I have to pay my health insurance myself and pay for day care. These two positions are 1000 Euro per month. Housing is less than that. I live in Germany and have private health insurance and two kids.
Thank you for all your rich information! On the course to retiring early and the Guilt Free Spending part was my favorite! 💪
2:43 For housing does that 28% figure including the phantom costs, or just the mortgage? How can we calculate those costs as they fluctuate massively
TOTAL! You factor it all in, adding a nice buffer. Given enough time, they don't fluctuate that much -- you can even factor in a roof repair 13 years from now by dividing the approximate amount by 156 months
Your book is still on my shelve. I am making a goal to read it this month.
Thank you. Your tips made me see money in different lenses. Spend & enjoy what you like while minimizing unwanted things.
I’d suggest adding a 1-10% donation to this list. It allows you to contribute to making the world a better place, and also reducing your paycheck by that small percentage encourages greater financial responsibility with the remaining amount.
Recently got your book completely eye opening. Now teaching my teens principles from your book 💕
My mortgage is too expensive. But I had just sold a house and made enough to easily put 40% down on the new one (I put 20% and invested the rest). It's not been super fun. My savings was much more powerful than my income, but as a result, I'm now getting an MBA and pushing myself to earn more to fix it.
At least I have no other debt and a very inexpensive (read "I'm really cheap") lifestyle other than that.
Hi, may i know how to know or categorize the 'trip' in saving and the 'vacations' in guilt free spending you mentioned, should in just savings or guilt free spending? Aren't those are the same/similar things?
When is it okay to substitute ur fixed costs with your investment income ?
Great video, well explained, thank you. Big fan!
This doesn't accommodate when fixed costs are high and genuinely can't be lowered. (Committed lending) We drive a 13 year old Ford Focus we bought outright for 2500 and live in an energy efficient house with a really cheap mortgage (400 a month - lots of equity). We budget carefully for food. There is little left over every month for overpayments, saving or investments and no scope for a meaningful pay rise in our industry (government).
Hey...Ramit you really changed my perspective on money and life... Thanx for all your insights and wisdom... I have my own business and it's been tough the past few years but you gave me new hope.... Just wanted to know I'm from South Africa and I want to invest in the S&P 500 how do I proceed because Vanguard won't let me join since I'm not an Amercan citizen... I really want to invest in the more stable markets and I don't trust these sneaky brokers and companies... they're not here to help me just in it for themselves please advise... Thanx again for all that you do for so many people
Thanks Ramit! Very good video. I will try to save more instead of investing it all. It is indeed a good feeling to be able to spend some money on things you like also. Life is very short, we all have to enjoy it now we can. ❤
whispers "I CAN DO THIS. I DON'T NEED TO BE A PSYCHO!" 😅
😂😂😂
One thing you didn't mention for fixed cost is the cost of insurance which is a big one!!!!!!!!
Where is the advising for retirees on fixed incomes?
Hah--felt called out by the last portion. Previous job had my finances in a spot to do ~20% savings, occasionally 30%+ light spending months. Got a new job with 85% raise, but was like "no lifestyle creep" and have sat on a 50%-65% savings rate for nearly 2 years now. Realized at some point along the way and created a separate savings account to earmark money set aside to spend on literally anything even if I don't have much to spend it on today as a frugal person who is satisfied with what I have. It's helped, but not fully; good to have that separate pool of money that says "under no circumstances should this be put into something for long term savings."
Excellent Video.. Forced me to ask myself some serious questions 🤔
Watching your show on Netflix and now following you on social. Best part I like about your method is the Guilt Free Spending!! About time we hear about actually enjoying your life too!!
I’m one of these oversavers, it’s honestly really hard I guess like actual guilt and can’t stop thinking about spending things. Like why is it so hard from me to enjoy myself. Constantly have my mom in the back of my head saying money is hard to come and quick to go out save your money.
This is very common. If you want to change the way you look at money, talk about money, and behave with money, join me in my Money Coaching program (iwt.com/moneycoaching). We talk live every month about money psychology.
started investing at 42 ive got 4 indexs now amd put at the least 740 a month between them not equally though but ive got my own system i was literally inly saving my moneys in a credit union only 🤓
I have a question what about the one we have debt car, or house how do we invest first to pay off all the debt???
6:17 still can't get it. She have been investing $200 for 10 year and he for 20 year and result is the same?
Is it simple and compound interest?
Your explanation of the extra 15% for “fixed costs” is the very definition of “variable expenses.”
I don't know anyone who has disposable income (category 4) any more because of hyperinflation of fixed costs
Great videos Ramit! i found your videos on accident a month ago. I cant stop watching your videos. i need your help!
Ramit, your videos are getting better and better. But you never mentioned about how to 'protect our wealth' via getting the right types of medical & life insurance. A video on it soon, perhaps? - subscriber from Malaysia
when you say "total take home pay" are you adding back in any retirement plan contributions you make? if i am putting 12% of my pre-tax salary into my 401k, should that count as take home pay for the purposes of your budget calculations?
Love you tips, always so helpful!
What’s confusing is that our mortgage (including a generous amount for phantom costs) is 30.7% of gross income (actual mortgage+escrow which includes PMI, homeowners insurance, and property taxes is just over 19% of my gross income, we have no debt and drive a 2006 Honda Civic we bought with cash, but our fixed costs are like 85% of our take home pay.
Our rich life includes us having been very conservative with our mortgage so we’d have job flexibility, but on one income, we can barely save for our “true expenses” (long time YNAB users) like holiday gifts and car repairs, let alone vacations or guilt-free spending.
Here’s hoping I get a fat tax return next March, otherwise, where’s the money??
After watching this video I started to question myself about over-saving/over-investing. I started saving/investing in my thirties, and because of not starting earlier I believe that I have to compensate for all the time lost while feeling fearful that everything I do for now on won't be enough to guarantee my retirement. How can I deal with this feeling of uncertainty and fear that no matter what I do it's not enough?
I love this video. Super simple. When calculating the % of the costs, I am assuming its after tax right (i.e take home money?) Also do you use a particular app to track or you recommend the digital banks which have smart categorisation?
9:58 this was me when I got my first job tracking everything down to the cent in a spreadsheet 😂
Question, it's June and we have already maxed out our IRAs, we divided 14,000 by 12 months and put that number into post tax investments.
But after watching this, we already have that number in our "assets" Correct?
Brilliant content/videos. I learn something new each time. Thank you for sharing your expertise!
Ramit, what is the denominator? Is it pay before any taxes, ss, Medicare, health insurance, 403b etc. or after all that is deducted (which is close to 40% less)?
I love your direct humor! Especially about not having to be a psycho comparing broccoli prices! Hahaha
I have been saving quite a bit to the point that I started to feel guilty spending money. We have a system where we have cash when we go on vacation. We have cash and it’s guilt free spending
What about tithing? Is that fixed income? And what if my retirement contributions come out of my gross pay, not take home? How do I calculate that? Love your advice and just realized I might need to ease up on the savings. I am at 19%
For me, it still helps to know what prices groceries are. Groceries have inflated in price of nearly 25% since the start of the pandemic. This coudl be $1,000 to $2,000 more per year.
Wonderful insights and vision. People tend to follow the income inflation trap (adding more costs to their household when they start to earn more). This will not help to become financially free.
Pause at 5:45 to see Ramit wrestling with an invisible sock puppet 😂. Great vid. Just what we need
What was I doing wasting my time in the womb! I should’ve been investing. - showcases that it’s never too late to start investing because all of us are late.
Charitable donations are not fixed expenses. They are guilt free spending
"Frugality Freaks" made me chuckle 😂
Thanks for helping make finances simple. Great video! Also your video editor has done a great job 🙂👌
1. Fixed costs - 50%-60% of net pay
2. Long term investments - 10% pay
3. Savings - 5-10% of net pay
4. Guilt free spending 20%-35%
Where do l buy the book?
dang this is really solid financial advice, thank you for sharing freely on RUclips Ramit
"...Their spending skills have atrophied..." 😢 I believe I'm there. I cannot spend without guilt, and when I spend I overspend.
Dear ramit could you explain more on investment
Would you agree there are periods of time where it makes sense to deviate from this general rule? E.g saving for a down-payment/move, debt repayment
Yes
Great advice. This works.
there's a book called whispers of manifestation on borlest , and it talks about how using some secret tehniques you can attract almost everything in life it's not some bullshit law of attraction, it's the real deal