Ramit, I wish you would give more advice to college students. Most of us are truly living paycheck to paycheck and that's not an exaggeration. I'm lucky enough to get scholarships so I don't have to pay for school, but nearly everyone i know has 2 part time jobs while going to college.
Counterpoint: most of people who go on Caleb's show think they are a 5/10 when in reality they are 30k in debt, don't pay their taxes on time, and have a few bills in collections. Just because they feel they're in a good position, doesn't mean they are. Also, I don't care if people's net worth increases 23-37% if 90% of that increase is because of their home. I know too many people who's only retirement plan is the equity in their house.
To be fair, Caleb chooses people in extremely precarious situations for click through. He also states in this video the disconnect between what many people think about their finances vs reality. A simple example can be drawn from the same anecdotes on Caleb’s show: People say they’re drowning and “need” to take debt out, but the vast majority of their spending is reckless (taquitos). The data being shared in this video is accurate, anecdotes aside.
This was so incredibly eye opening! Thank you Ramit - this is the type of stuff I love to get corrected on! These talking points are huge fodder for doom and gloom misinformation. Thank you for bringing reality to the situation and giving actionable plans for folks to improve their situation
When it comes to the can you afford X luxury good, I am going based on can you save up for it specifically without impacting any other category in your CSP. Like if you want a $2000 mattress, but you only have have $200 extra a month outside of the normal spending and savings, then you could afford it in like 10 months (taxes on the purchase should be included in the amount saved). For me this is one of those evergreen concepts from childhood that still applies in adulthood. In theory you can afford anything, as long as you save up for that thing specifically. Yes it will take time, but all good things in life take time investment.
Hi Ramit - can you do (or link to a video if you have done) a video for retirees? figuring out how to handle our money during retirement is not easy for us as a couple (complicated differences include huge health issues and varied emotional views of money).
I have to call myself out and I fit #1! I always told myself we're living paycheck to paycheck, but we were each investing 25% to our 401(k) and then additional to max our IRA. I had to do the math on what ours would be has we not and then I slapped myself. 🤣
I must not be the median American household , because we're barely able to tread water right now and have lots of credit card debt just to pay for the necessities. I like Ramit's advice, but he's definitely out of touch with a large swath of America.
Yes Ramit. Thank you. The economy is good right now and has been on the rise for the last few years. What would your advice be in the volatile times like we have coming?
The "making financial decisions" was us. You could say we lived paycheck to paycheck - but we were putting ~20% of our income into investments. And we still had enough coming into the checking account for all the monthly bills and discretionary spending. And then there was the cash cushion that we could have lived on for a few months, longer with a bit of belt tightening. We didn't get into that situation overnight, but it was worth it.
Great video. I respectfully disagree about your point on “other” investments. While I agree there are diminishing returns when you cross the border of good quality to luxury to me there is real monetary value in some of the items you listed. -Having a quality mattress for quality sleep has real health benefits that can in long run reduce disease or medical bills -putting money into better quality clothes can save money in terms of longevity , repairs etc. also depending on your field it may help with confidence, executive presence etc which can result in monetary gains such as increased sales, promotions I think the viewpoint is nuanced because the calculations aren’t as easy to get as let’s say an ETF however to me it doesn’t make the gains any less real
A personal trainer, a good mattress and quality food are an investment. For your health, future and longevity. The greatest wealth out there. 😊 Yes, I do buy organic blueberries.
This is a question for those who like to use Ramit’s method of separating money with multiple checking and saving accounts: do you find this system easy to maintain? Obviously, you set up automatic transfers to simplify some of the process , but overall it seems like you have to transfer a lot of money around when you spend I.E. save for a trip in savings account and then spending money for that trip by transferring back to a checking account / credit card. Huge fan of the content! I’d just like to get a sense of others perspective .
A lot of banks give people the ability to categorize within an account. If that’s not available then a lot of financial software allows for the same thing. I use excel and when I enter the deposit it automatically splits that deposit into my preferred categories.
Most employers have the flexibility to automatically deposit a portion of your paycheck to whichever accounts you’d like. If they don’t, you can set your own bank account up to transfer money directly into another account, savings, etc. It’s similar to any other habit in my opinion
So, I dont have his exact system cuz I dont live in the states and we dont have any tax-deferred/tax-advantaged things here. No ira, 401ks etc. i take paycheck it hits checking in direct deposit. From that, I take 30% to an investment account that automatically distributes among my chosen index funds. 5% goes to a emergency savings account. Its already full with 9 months emergency, so that amount is just to cover once a year expenses, like insurance and repairs for my scooter etc. there is a debit card associated with that I can spend directly from so I dont need to transfer money back to checking unless its to cover rent, and I keep a 1k buffer in checking so only after 2 months of unemployemnt would i need to start transferring. 5% goes to separate “fun money savings” account that has a credit card attached to it I can spend from. That card and account were chosen bcuz of no fee cash withdrawals abroad, no fee currency exchange etc and some modest travel rewards on rentals etc. not the best available but the ones with better rewards had really high fees that made no sense to my expenses. When I travel (or use fun money) I use that specific card to pay directly from that account, I dont transfer back to checking. The rest stays in checking with cashback cc to cover normal expenses like groceries/gas etc. there is some left over every month I leave as buffer and once a year before tax season I transfer anything over 1k in checking to investment. So no, I dont feel like I transfer a lot back and forth cuz I dont. Its two automatic tranfers a month from cheking. everything is automatic and it actually helps me mentally to have different cards and accounts for each thing. Also helps to plan vacation spending just by looking at the fun money account so it makes deciding easier.
Hey Ramit, great video! I have a question about handling savings goals, like for a vacation. When it’s time to use the money you’ve saved, what’s your approach? Do you add the amount back in as income for that month and track the expenses as part of your budget or do you have a different approach? Thanks!
I’m not Ramit but some apps like EveryDollar have a fund savings budget lines, so when the time comes to spend that money you just take it out from that fund line in the budget.
You have put it into the budget while saving so I'd put it as a one time expense when actually spending the money. Then this month might end with more spent than income, but who cares?
I used to have this mindset as well and project my own issues onto others. He clearly takes an empathetic approach with people and in this video he’s showing data accurately. Not one time does he disparage “poor” people. Videos like this should be encouraging - would you rather have confirmation bias via doom and gloom vids with misleading data for comfort?
Quite same people on his or similar channels are in debt while having enough income that I'd run out of ideas what to get after only a few years. On the other hand that'svery interesting to see that more money doesn'talways solveall money problems. .
@@kayjay7865 It's no different from buying a piece of fine art or a historical artifact. You purchase a watch that you feel will increase in price over the years, and sell when that price is high enough. You might choose to wear th watch; better if you don't. It's an investment, not a functional object. This also usually applies only to *very* expensive watches.
Ramit, I wish you would give more advice to college students. Most of us are truly living paycheck to paycheck and that's not an exaggeration. I'm lucky enough to get scholarships so I don't have to pay for school, but nearly everyone i know has 2 part time jobs while going to college.
Counterpoint: most of people who go on Caleb's show think they are a 5/10 when in reality they are 30k in debt, don't pay their taxes on time, and have a few bills in collections. Just because they feel they're in a good position, doesn't mean they are. Also, I don't care if people's net worth increases 23-37% if 90% of that increase is because of their home. I know too many people who's only retirement plan is the equity in their house.
Retirement savings have been increasing at a great rate thanks to the Biden economy. That accounts for a lot of the increase in net worth too.
To be fair, Caleb chooses people in extremely precarious situations for click through. He also states in this video the disconnect between what many people think about their finances vs reality. A simple example can be drawn from the same anecdotes on Caleb’s show: People say they’re drowning and “need” to take debt out, but the vast majority of their spending is reckless (taquitos). The data being shared in this video is accurate, anecdotes aside.
Great video Ramit. Given how much incorrect data is spouted online these days, it is nice to see a video like this based on facts.
agreed overall, but I don't know about the sheep farmer, he might have cool ideas 🐑
Pour one out for that poor called-out sheep farmer. 😆
This was so incredibly eye opening! Thank you Ramit - this is the type of stuff I love to get corrected on! These talking points are huge fodder for doom and gloom misinformation. Thank you for bringing reality to the situation and giving actionable plans for folks to improve their situation
When it comes to the can you afford X luxury good, I am going based on can you save up for it specifically without impacting any other category in your CSP. Like if you want a $2000 mattress, but you only have have $200 extra a month outside of the normal spending and savings, then you could afford it in like 10 months (taxes on the purchase should be included in the amount saved).
For me this is one of those evergreen concepts from childhood that still applies in adulthood. In theory you can afford anything, as long as you save up for that thing specifically. Yes it will take time, but all good things in life take time investment.
Hi Ramit - can you do (or link to a video if you have done) a video for retirees? figuring out how to handle our money during retirement is not easy for us as a couple (complicated differences include huge health issues and varied emotional views of money).
Love a fired up Ramit
I have to call myself out and I fit #1! I always told myself we're living paycheck to paycheck, but we were each investing 25% to our 401(k) and then additional to max our IRA. I had to do the math on what ours would be has we not and then I slapped myself. 🤣
I must not be the median American household , because we're barely able to tread water right now and have lots of credit card debt just to pay for the necessities. I like Ramit's advice, but he's definitely out of touch with a large swath of America.
Yes Ramit. Thank you.
The economy is good right now and has been on the rise for the last few years.
What would your advice be in the volatile times like we have coming?
The "making financial decisions" was us. You could say we lived paycheck to paycheck - but we were putting ~20% of our income into investments. And we still had enough coming into the checking account for all the monthly bills and discretionary spending. And then there was the cash cushion that we could have lived on for a few months, longer with a bit of belt tightening. We didn't get into that situation overnight, but it was worth it.
Great video. I respectfully disagree about your point on “other” investments. While I agree there are diminishing returns when you cross the border of good quality to luxury to me there is real monetary value in some of the items you listed.
-Having a quality mattress for quality sleep has real health benefits that can in long run reduce disease or medical bills
-putting money into better quality clothes can save money in terms of longevity , repairs etc. also depending on your field it may help with confidence, executive presence etc which can result in monetary gains such as increased sales, promotions
I think the viewpoint is nuanced because the calculations aren’t as easy to get as let’s say an ETF however to me it doesn’t make the gains any less real
Feelings don't care about your facts
A personal trainer, a good mattress and quality food are an investment. For your health, future and longevity. The greatest wealth out there. 😊
Yes, I do buy organic blueberries.
Still not an investment. It can be well spent money if it's not financed with "bad debt" and the money isn't needed elsewhere.
OK....
I am LITERALLY LOL at the No As A Service bit...
;-)
😂 "No" service! People would pay for that!
Thanks for sharing the Truth with your subbies, we need this badly. Americans have waaay more💵 than reported🙏🏿😊
It would appear that there are many Americans who believe those stats and have that mental attitude about their money and voted accordingly.
This is a question for those who like to use Ramit’s method of separating money with multiple checking and saving accounts: do you find this system easy to maintain? Obviously, you set up automatic transfers to simplify some of the process , but overall it seems like you have to transfer a lot of money around when you spend I.E. save for a trip in savings account and then spending money for that trip by transferring back to a checking account / credit card. Huge fan of the content! I’d just like to get a sense of others perspective .
A lot of banks give people the ability to categorize within an account. If that’s not available then a lot of financial software allows for the same thing. I use excel and when I enter the deposit it automatically splits that deposit into my preferred categories.
Most employers have the flexibility to automatically deposit a portion of your paycheck to whichever accounts you’d like. If they don’t, you can set your own bank account up to transfer money directly into another account, savings, etc. It’s similar to any other habit in my opinion
So, I dont have his exact system cuz I dont live in the states and we dont have any tax-deferred/tax-advantaged things here. No ira, 401ks etc. i take paycheck it hits checking in direct deposit.
From that, I take 30% to an investment account that automatically distributes among my chosen index funds.
5% goes to a emergency savings account. Its already full with 9 months emergency, so that amount is just to cover once a year expenses, like insurance and repairs for my scooter etc. there is a debit card associated with that I can spend directly from so I dont need to transfer money back to checking unless its to cover rent, and I keep a 1k buffer in checking so only after 2 months of unemployemnt would i need to start transferring.
5% goes to separate “fun money savings” account that has a credit card attached to it I can spend from. That card and account were chosen bcuz of no fee cash withdrawals abroad, no fee currency exchange etc and some modest travel rewards on rentals etc. not the best available but the ones with better rewards had really high fees that made no sense to my expenses. When I travel (or use fun money) I use that specific card to pay directly from that account, I dont transfer back to checking.
The rest stays in checking with cashback cc to cover normal expenses like groceries/gas etc. there is some left over every month I leave as buffer and once a year before tax season I transfer anything over 1k in checking to investment.
So no, I dont feel like I transfer a lot back and forth cuz I dont. Its two automatic tranfers a month from cheking. everything is automatic and it actually helps me mentally to have different cards and accounts for each thing. Also helps to plan vacation spending just by looking at the fun money account so it makes deciding easier.
Hey Ramit, great video! I have a question about handling savings goals, like for a vacation. When it’s time to use the money you’ve saved, what’s your approach? Do you add the amount back in as income for that month and track the expenses as part of your budget or do you have a different approach? Thanks!
I’m not Ramit but some apps like EveryDollar have a fund savings budget lines, so when the time comes to spend that money you just take it out from that fund line in the budget.
That's what I do.
You have put it into the budget while saving so I'd put it as a one time expense when actually spending the money. Then this month might end with more spent than income, but who cares?
"Everything is fine and if you're poor it's your fault"
I used to have this mindset as well and project my own issues onto others. He clearly takes an empathetic approach with people and in this video he’s showing data accurately. Not one time does he disparage “poor” people. Videos like this should be encouraging - would you rather have confirmation bias via doom and gloom vids with misleading data for comfort?
I know this guy who says he lives ptp, forgetting that he contributes to 401k and builds equity via mortgage.
I felt targeted when you said my espresso machine is not an investment…
11:56 sounds like a great deal, how could I pass this up?
Ramit skipped Step Zero - make enough income / have any margin at all
Quite same people on his or similar channels are in debt while having enough income that I'd run out of ideas what to get after only a few years.
On the other hand that'svery interesting to see that more money doesn'talways solveall money problems. .
No
Feels good
Ayyyyy first
A luxury watch can be an investment and still treat yourself and feel good
Only if you are willing to sell it if the value rises enough.
Can u explain how a luxury watch is an investment
@@kayjay7865 It's no different from buying a piece of fine art or a historical artifact. You purchase a watch that you feel will increase in price over the years, and sell when that price is high enough.
You might choose to wear th watch; better if you don't. It's an investment, not a functional object.
This also usually applies only to *very* expensive watches.
@@kayjay7865 if you buy the right brand right model, it will increase in value overtime or at least maintains it. That’s why people invest in them
@@lizcademy4809Thank you!!! Plus the watch must be in pristine condition at the time of sale, so you shouldn't actually wear it.