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

How To Manage Your Money Like The 1%

Wealth Composition & Mindset

The richest people primarily fall into these categories:

75% Entrepreneurs (business owners)
15% Investors (asset owners)
7% Inheritors of wealth (trust owners)
3% Athletes, entertainers, artists (own rare skills)
0% Employees earning just a salary

Core message: To manage money like the 1%, you must own assets rather than just earn a salary.

The 25-15-50-10 Rule for Income Allocation

A practical framework to allocate your income effectively:

1. 25% Towards Growth (Investing for appreciation and income)

Invest in assets that increase in value and generate income.
Avoid spending leftover money on non-value items.
Start investing early to maximize compound growth.

Example: - Billy invested $200/month from age 20 for 40 years → $1,264,816 at 10% annual return. - Phil invested $300/month from age 30 for 30 years → $678,146 at 10% annual return. - Starting earlier beats investing more later.

Growth asset classes ranked by risk/reward:

Low risk: Index funds (e.g., S&P 500)
Real estate (rental properties or REITs)
Skills that generate income (copywriting, coding, sales)
Online businesses (dropshipping, digital products)
Individual stocks (small allocation, hobby level unless expert)
Alternative investments (Bitcoin, Ethereum, NFTs, gold, collectibles) – high risk, “moonshots”

Recommendation: Start with index funds and high-income skills.

2. 15% Towards Stability (Emergency fund and risk management)

Build a stability fund equal to 5x monthly essential expenses.
- Calculate monthly baseline (groceries, rent, utilities, transport, essential services).
- Example: $1,500/month baseline → $7,500 emergency fund target.

Emergency fund rules:

Easily accessible (within 24 hours)
Zero risk (no stock market, crypto, or long-term bonds)
Earn some interest (high-yield savings accounts with 4-5% interest)

Saving tactics:

Paycheck sweep: Automatically transfer 15% to emergency fund monthly.
Replacement promise: Immediately replenish any emergency fund withdrawals.
Save by spending hacks: Use roundup apps or cashback rewards to boost savings.

Once fully funded, redirect money to growth or rewards.

3. 50% Towards Essentials (Living expenses)

Essentials include necessary expenses: rent/mortgage, groceries, utilities, transport, insurance, clothes.
Cut non-essentials like takeout, unused subscriptions, gym memberships, streaming services.
Aim to cap essentials at 50% of income to avoid lifestyle creep.

Focus on reducing two biggest categories:

Housing: Negotiate rent, consider house hacking, keep housing ≤ 50% of essentials.
Transport: Avoid new car leases; buy reliable used cars under half of essentials budget or eliminate car if possible.

Use rules, not willpower, to avoid impulse spending:

7-day rule on impulse purchases.
Ask if buying for brand or value; prefer value.
Assess if purchase improves life; avoid dopamine-driven buys.

4. 10% Towards Rewards (Sustainable enjoyment)

Allocate 10% of income for guilt-free spending on:
- Vacations (stress relief, health investment)
- Hobbies (passion, mental health)
- Social experiences (dinners, concerts)
- Gifts for loved ones (relationship building)

Strategy for rewards:

Preload a separate “joy jar” account with 10% monthly automatic transfer.
No topping up from other funds; once depleted, wait until next month.
Prioritize experiences over material goods for lasting value.

Investing Methodology & Specific Assets Mentioned

Index Funds:

Vanguard S&P 500 ETF (US stock market exposure)
Vanguard Total Stock Market Index Fund (VT, US)
iShares MSCI World UCITS ETF (Ticker: IWDA) – international stocks
iShares USD Treasury Bond 7-10 Years UCITS ETF (Ticker: IBTM) – bond fund for stability

Platforms:

Trading 212 (UK-based investing platform)
- Stocks and Shares ISA (UK tax-advantaged account, £20,000/year limit)
- Promo code “Tilbury” for free fractional shares up to £100
US tax-advantaged accounts:
- Roth IRA (tax-free growth and withdrawals, $7,000/year limit under age 50)
  - Example: Peter Thiel grew Roth IRA to $5 billion via early-stage tech investments
- 401(k) (pre-tax contributions, employer match)

High yield savings accounts recommended for emergency funds:

SoFi, Ally, Marcus by Goldman Sachs (FDIC insured, 4-5% interest)

Macroeconomic/Market Context & Risk Management

Emphasis on compound growth over time (10% average S&P 500 return historically).
Importance of starting early to maximize returns.
Risk spectrum of assets from low (index funds, bonds) to high (alternative investments).
Emergency funds must be liquid and risk-free to avoid forced selling in downturns.
Avoid lifestyle inflation to maintain savings and investment discipline.
Use automation to reduce behavioral risks (automatic transfers for investing, savings, and rewards).

Explicit Recommendations & Cautions

Start investing early, even small amounts.
Prioritize index funds and skill-building for steady growth.
Use tax-advantaged accounts to minimize tax drag.
Keep emergency fund liquid, safe, and earning interest.
Cap essentials at 50% of income to avoid lifestyle creep.
Use rules (7-day rule, value vs. brand) to avoid impulse spending.
Allocate 10% of income to guilt-free spending for sustainability.
Alternative investments (crypto, NFTs, collectibles) are high risk; only risk what you can afford to lose.
Not financial advice; presenter shares personal experience and methodology.

Presenters / Sources

The video is presented by a personal finance YouTuber (name not explicitly given).
Sponsored segment by Trading 212.
Reference to Peter Thiel as an example of Roth IRA usage.

Summary

This video teaches a practical money management framework modeled on the habits of the top 1%, emphasizing:

Asset ownership over salary dependence
Disciplined income allocation (25% growth, 15% stability, 50% essentials, 10% rewards)
Early investing with compound growth
Risk management via emergency funds
Tax-efficient accounts
Mindful spending habits

It provides actionable steps for portfolio construction using index funds, real estate, skills, and alternative investments, alongside advice on reducing lifestyle inflation and maintaining sustainable financial discipline.