Summary of "How To Manage Your Money Like The 1%"

The video "How To Manage Your Money Like The 1%" presents a straightforward financial management strategy called the 15652 system, inspired by practices used by the top 1% of earners. The core message is that managing money wisely is more important than how much you earn. The system breaks down income allocation into three parts:

The 15652 system Breakdown:

15% for Savings and Investments
- Build an emergency fund starting with one month of essential expenses, then grow it to 3-6 months to provide financial security and peace of mind.
- Use the remaining portion to invest and make your money work through compound interest.
- Start investing early to maximize compound growth, illustrated by comparing two investors—one starting early with a lump sum and another starting later with regular contributions.
- Maximize employer-matched retirement plans (e.g., 401(k) in the US, workplace pension in the UK) to get “free money.”
- Prioritize tax-advantaged accounts (e.g., Roth IRA in the US, Stocks and Shares ISA in the UK) before investing in regular taxable accounts.
- Invest in passive funds (index funds) for diversification, low fees, and a hands-off approach, which is favored by many successful investors.
65% for Fundamental Expenses
- Allocate no more than 65% of income to essential living costs like rent/mortgage, groceries, utilities, and transportation.
- Keep these expenses in check to avoid lifestyle inflation, which can erode financial progress.
- Analyze your spending categories and find ways to optimize or reduce major costs (e.g., negotiate rent, find cheaper transportation).
- Maintaining this cap prevents financial strain and frees up money for savings and enjoyment.
20% for Enjoyment and Personal Fulfillment
- Allocate 20% of income for guilt-free spending on hobbies, leisure, and personal treats.
- This “fun fund” helps maintain motivation, balance, and long-term adherence to financial goals.
- Allowing flexibility prevents burnout and reduces the risk of overspending or abandoning savings plans.
- Examples include dining out, buying desired items, or planning social trips.

Additional Insights:

The video emphasizes the power of compound interest and starting early.
It explains the difference between tax treatments of workplace retirement plans (taxed on withdrawal) and tax-advantaged accounts (taxed upfront).
Encourages simplicity by using passive funds rather than trying to beat the market.
Highlights the psychological benefits of budgeting for enjoyment.
Mentions a free masterclass for deeper learning on investing and fund types.
Sponsored by Skillshare, an online learning platform with courses on finance and other skills.

Methodology / Step-by-Step Guide:

Save 15% of income for emergency fund and investments.
Build emergency fund starting with 1 month of essential expenses, then increase to 3-6 months.
Invest early and regularly, prioritizing employer-matched retirement plans.
Max out tax-advantaged accounts before investing in taxable accounts.
Invest in passive index funds for diversification and low fees.
Limit fundamental expenses to 65% of income by reviewing and optimizing spending.
Allocate 20% for guilt-free personal spending to maintain motivation and prevent burnout.

Presenters / Sources:

The video is presented by an investment banker with 10 years of experience working with high net worth clients.
Sponsored by Skillshare, an online learning platform.
References concepts from the book "Die With Zero" by Bill Perkins.

This summary captures the key financial strategies, practical steps, and mindset shifts recommended to manage money like the wealthy 1%.