How to Manage Money Like the Top 1%

In this episode of the Personal Finance Podcast, we're going to talk about how to manage your money like the top 1%. How Andrew Can Help You: Don't let another year pass by without making significant strides toward your dreams. "Master Your Money Goals" is your pathway to a future where your aspirations are not just wishes but realities. Enroll now and make this year count! Join The Master Money Newsletter where you will become smarter with your money in 5 minutes or less per week Here! Learn to invest by joining Index Fund Pro! This is Andrew’s course teaching you how to invest! Watch The Master Money Youtube Channel! , Ask Andrew a question on Instagram or TikTok. Learn how to get out of Debt by joining our Free Course Leave Feedback or Episode Requests here. Thanks to Our Amazing Sponsors for supporting The Personal Finance Podcast. Shopify: Shopify makes it so easy to sell. Sign up for a one-dollar-per-month trial period at shopify.com/pfp Chime: Start your credit journey with Chime. Sign-up takes only two minutes and doesn’t affect your credit score. Get started at chime.com/ Thanks to Fundrise for Sponsoring the show! Invest in real estate going to fundrise.com/pfp Thanks to Policy Genius for Sponsoring the show! Go to policygenius.com to get your free life insurance quote. Go to joindeleteme.com/pfp20 for 20% off! Go to Acorns.com/pfp and start automating your investments and get a $5 bonus today! Links Mentioned in This Episode: Why Index Fund and ETF's Investing Could 10x Millionaires How to Break The Paycheck-to-Paycheck Cycle (IN 2025) How to Invest In Yourself and Earn More (THIS YEAR!) Connect With Andrew on Social Media: Instagram TikTok Twitter Master Money Website Master Money Youtube Channel Free Guides: The Stairway to Wealth: The Order of Operations for your Money How to Negotiate Your Salary The 75 Day Money Challenge Get out Of Debt Fast Take the Money Personality Quiz Learn more about your ad choices. Visit megaphone.fm/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Andrew Giancola?

  Longtime listeners know, one of the best ways to build wealth is to increase your income. And one way to do that is by starting a side hustle. And that's one reason why I absolutely love Whatnot. Now, my son and I, we love collecting sports cards. And we've used Whatnot to buy and sell cards. It's been a really fun way to enjoy something we love together. Now, Whatnot is a live shopping platform where people sell everything from sports cards to clothing, electronics, and collectibles. And what's really cool about it is you can turn something you're passionate about into a business. And you could do it right from your phone. You don't even need a storefront or a website. So whether you're looking to make some extra money or find great deals on your next shopping trip, check out Whatnot.

• 0:44Andrew Giancola?

  Search Whatnot, that's W H A T N O T, in the App Store. Download and start selling right away. When I started the Personal Finance Podcast, I had no idea how big it could become. I just knew I had something I wanted to share, so I started putting it online. And looking back, I definitely wish I would have started a decade earlier. One of the horror parts about building something online, though, is making it look professional. A website used to mean hiring a developer, figuring out design, and potentially spending thousands of dollars. In fact, on my website, I spent tens of thousands of dollars. That's what impressed me when playing around with Hostinger's AI website builder.

• 1:27Andrew Giancola?

  I told it what kind of website I wanted, and I built the first version in minutes. No coding, no designer or developer needed. And Hostinger doesn't stop at launch. Their AI can help with SEO, website copy, email marketing, and more. Plus, your domain, website, email, and marketing can all live in one account, with plans starting at just $3 every single month. Hostinger builds your vision step by step. Create your website today. Go to hostinger.com/pfp and use code PFP for 10% off now. On this episode of the Personal Finance Podcast, how to manage your money like the top 1%.

• 2:24Andrew Giancola?

  What's up everybody and welcome to the Personal Finance Podcast. I'm your host, Andrew, founder of MasterMoney.co. And today on the Personal Finance Podcast, we're going to be talking about how to manage your money like the top 1%. If you guys have any questions, make sure you join us on the Master Money Newsletter by going to MasterMoney.co/newsletter. And don't forget to follow us on Spotify, Apple Podcasts, YouTube, or whatever podcast player you love listening to this podcast on. And please, if you want to help out the show, consider leaving a five-star rating and review. Cannot thank you guys enough for following the show and leaving those five-star ratings and reviews.

• 3:05Andrew Giancola?

  They truly mean the world to me and it helps this show spread the message. Now today, we're going to be diving into how to manage your money like the top 1%. And the number one thing that I want you to take away from this is it's not how much money you make, it's about how much of your money you can actually keep. And so what I'm going to do today is I'm going to show you how much you should be spending in various areas when your money comes in. When that money hits your checking account, how do you need to manage that money so that you can have top 1% wealth and do it the same way that wealthy people do. And for most people, you're going to learn how much you should be spending on essentials and what that goal should be. We're going to be talking through how much

• 3:48Andrew Giancola?

  you should spend on investments, where I would actually allocate those dollars, how I would think about investments. And then lastly, you're going to learn how much you should spend on things that you love and enjoy, because we want you to utilize money as a tool, and we want you to spend more on the things that you love. And so I want you to spend as much as you possibly can on the things that we love. Now, to do this, I'm going to introduce you to the 2055-25 rule. Now, this rule works in a very specific way, because we're going to talk through how much you should spend in these various areas, and then we're going to nail down how you can improve some of these areas if you're spending way outside of where you should be. So, without further ado, if that's something you're into, let's get into it.

• 4:34Andrew Giancola?

  Now, the first part of the rule is 20% and 20% is allocated towards future you. This is going to be something I think most people need to make sure that you focus on first is when you get paid, you want to pay yourself first. This is the number one rule of personal finance because if you do not pay yourself first, you start to commingle all of your money with the rest of your bills and you really don't allocate any money for a future you, you will have a very, very hard time getting ahead with your money. And so we want to make sure that we are allocating at least 20% for our future selves. Now, what most people need to understand is as we start to talk through some of these numbers,

• 5:17Andrew Giancola?

  this number is just partially a baseline to where you need to be in a range. I like when you try to set up spending plans that you have some sort of range set up for people. A lot of people are in different phases of their wealth building journey. And so you have to have a range in order to make sure that you have this set up. 20% is the minimum amount that I want you to allocate towards future you. Now, some of you may be saying to yourself, there is no way I can allocate 20% of my income towards future me. And that's where I want you to learn about the 1% rule of improvement. We talked through this a ton on this podcast, but what I want you to do is figure out how much you can actually save and invest for your future. And I want you to increase that amount every couple of months by 1% until you get to 20%.

• 6:02Andrew Giancola?

  So say, for example, you can only allocate 10% of your income towards saving for your future. Well, next month, I want you to allocate 11. Then I want you to start to work your way up towards 12, then 13%. And you can do this every other month and by the end of this year, you're going to be able to allocate another 6% towards future you. That means you're going to be at 16% and so you only have to make up another 4% over the course of the next couple of months. And by next year, you will be at 20% of your income. Now, you may be saying to yourself, well, where is all this money going to come from? How am I going to increase it by 1% over time? If you increase it by 1% over time, then look at areas that you can cut back by 1%. It may be a bunch of different areas across your budget. You may need to make a little bit more money,

• 6:46Andrew Giancola?

  but this gives you time to increase your income, to fill that capacity so that you can allocate dollars towards your future you. Now, if you do not invest your dollars towards future you, if you don't take this action step, this is the number one action step that I want you to take in this podcast episode. Because if you are not doing this, you will never be able to retire. You will never be able to have financial freedom. And if you're listening to me and you're at your day job right now, you're driving on your way to work in traffic, or you're on your way home in traffic, or you're in your cubicle right now, or you're in your office. Guess what? The only way to get yourself out of having to do that every single day is investing your dollars towards future you. You work so incredibly hard for these dollars, and you work so hard for your money that you need to make sure

• 7:31Andrew Giancola?

  that you are saving some of it for yourself. And I'm going to show you exactly how to do that today in the first part of this episode. Now, when I'm talking about future you, I'm talking about two different things. One is saving for your emergency fund. And number two is saving dollars towards investments. That means putting dollars in your retirement account, putting money in your brokerage account, saving for a real estate investment. It depends on what your specific goals are. So first, we're going to talk about how you need to build your financial foundation. And we do this with what? The emergency fund. We're going to go through the 136 method on how you need to allocate your dollars towards that emergency fund. Very, very important, because we have to have this financial foundation set up in order to make sure

• 8:16Andrew Giancola?

  that we are allocating dollars towards future us. So first, how do you set up your emergency fund? You start with a starter emergency fund with one month of expenses. Now, you're going to save up one month of expenses in a high-yield savings account. And you're going to do this automatically. So you're going to try to save as much as you possibly can in a high-yield savings account. There's a bunch of great high-yield savings accounts out there. I use Ally Bank because they have buckets that you can allocate there. If you can find another high-yield savings account with buckets, I would absolutely make sure I am looking to do that as well, because you can budget inside of that high-yield savings account. Once you have one month saved. Then I want you to start paying down high interest debt. High interest debt is the number one thing that you need to get rid of as fast as you possibly can.

• 8:59Andrew Giancola?

  Specifically, if you have something like credit card debt, or a personal loan, or a really high interest car note, you need to make sure that you are paying that down as fast as you possibly can. High interest debt is compounding against you and not for you. It is compound interest working in reverse. And so you need to understand, I've seen people trying to work through just $12,000 worth of debt, and they're paying $500 every single month, and they are still falling further and further and further behind because they are not taking care of that debt. You need to get way out ahead of that debt as fast as you possibly can. Now, if you are in debt and you want to learn how to get out of debt as fast as you possibly can, we have a free course. It's called "How to Get Out of Debt Fast."

• 9:39Andrew Giancola?

  If you go to mastermoney.co/courses, you'll see it there, and it's absolutely free. And you can take an hour, go through that process. I want you to work through that process if you can. Secondly, so once you get that high interest debt paid off, you have one month saved up in a high-yield savings account. Now, we're going to go to the three, which stands for three months. And what we are going to do is we're going to save up now three months of expenses in our high-yield savings account. Once we have that saved up, oh, boy, we can start to get our dollars rolling. And this is where the fun part starts because we can begin investing in our future selves. Now, the beautiful thing about investing is that once you start investing, you are able to watch your money grow and you can watch it compound.

• 10:23Andrew Giancola?

  And all of a sudden, you can make some amazing moves for future you. And a future you is going to appreciate this. And so, once we get three months saved up, now, it's going to take you some time to get three months of your income saved up in a high-yield savings account. But once we get that rolling, we start investing our money and growing it over time. Now, how much should you allocate towards each one? Because now, we want to make sure that, once we start investing, we are still putting more in our emergency fund until we get to six months. Six months in your emergency fund is the ultimate goal. And the reason why this is your ultimate goal, and this is what the six is, is because it is going to protect you against job loss. It is going to protect you against your car breaking down. It is going to protect you against medical bills. It is going to protect you against- Any other surprises that can happen in life?

• 11:06Andrew Giancola?

  Maybe there's an emergency move that you need to make across the country where you got offered a really amazing promotion and you need to take advantage of that promotion. Maybe there is some sort of natural disaster that wipes out your home and you have no other options. That has happened a number of different times this year. In Florida where I live, there were so many people who lost their homes to flooding. In California right now, there was just a bunch of fires that swept through LA. Natural disasters are another possibility that could happen and you need to have cash on hand in order to protect yourself when life happens. Those who have cash on hand and those who have an emergency fund are those who actually consistently can build wealth over time. And if you don't have that financial foundation, where if you don't have cash on hand, you

• 11:49Andrew Giancola?

  will never be able to get ahead long term. Something is going to happen to derail your progress and you're going to have to go backwards all over again. How many times, if you're living a paycheck to paycheck, have you gone through this process? And you're like, you save up a little bit of money and all of a sudden it feels like it's wiped out again. You save up a little more money and it feels like it's wiped away again. This is because we gotta get ahead with our cash. Now, I know this can sound daunting if you are just getting started. I know this can sound like it's something that is very difficult, but I promise you, if you stay disciplined, you can do this. Now, when we start talking about investing, what do we need to be doing when we start investing? Well, first, we need to make sure that when we begin investing, we are investing in the correct accounts.

• 12:33Andrew Giancola?

  Now, what accounts are out there? There is stuff, and this is the order that I like. The health savings account is number one. Now, most people are like, health savings account? What are you talking about? That sounds like it's a healthcare account. It is, but it's an amazing retirement account if you qualify. The way that it works is you put money in and you're not taxed on that money. The money will grow tax-free and you can pull the money out tax-free as long as you have a qualified medical expense. And so because of this, the HSA is a very, very powerful way to grow your money over time. I don't use it for healthcare expenses. I save for retirement in my HSA. So the HSA is number one. Number two is a Roth IRA. Now, many longtime listeners know. This is the order we talk about all the time.

• 13:15Andrew Giancola?

  The Roth IRA is absolutely amazing for wealth building. Why? Because money goes in, you've already been taxed on the money that goes in, but then your money grows tax-free inside of a Roth IRA. Now, why is this powerful? Because if you look at the long-term growth of your money, the growth is the majority. So you could be investing and maxing out your Roth IRA over the course of 30 years, and $800,000 to $900,000 of that growth will be completely tax-free. Imagine having almost $1 million tax-free. Now, if you do it over the course of 40 years, you're going to have $1.5 to $2 million tax-free, depending on what your rate of return is. And so this is a very, very powerful way to grow your net worth over time. Next is your 401K. Now, your 401K, money goes in and you get a tax deduction on that money when it goes in.

• 13:59Andrew Giancola?

  The money grows, and then when you pull the money out, then you get taxed on the money when you pull it out. And so for high earners, this is an amazing option as well, because you get that tax deduction this year. If you need a tax deduction this year, IRA, 401K, those are fantastic options for you. And beyond that, if you were maxing all these accounts out, you can go to a taxable brokerage account, you can start investing in real estate. There's so many cool options out there. But we gotta make sure that we are investing our dollars for our future selves. Now, what do you invest in? I like index funds and ETFs. And so one way that you can do that is look into investing into an S&P 500 index fund. There is international funds, there's bond funds, all those different things. If you want to learn more about investing in index funds and ETFs,

• 14:42Andrew Giancola?

  we have a course called Index Fund Pro that teaches you exactly how to do that. But as we talk through this, and we just had an episode talking through the benefits of index funds on the previous episode. So this is an amazing way for you to grow your wealth over time. And you want to make sure that you're allocating at least 20% towards future you. Now, 20% to 30% is the range that I like you in. Now, if you want to retire really, really quickly, some people will focus on increasing their income dramatically so that they can save a larger percentage of their income towards wealth-building activities like this. And when they do that, if you save 50% of your income, for example, you can retire in 17 years. I've seen people save 60% to 75% of their income because they keep their

• 15:24Andrew Giancola?

  Living expenses the same and they raise their income and when they do this, they are able to retire in 10 years or less. This is all just one big math problem. Retirement is not an age. Retirement is a number. So if you figure out what your goal is and you know how much you want to spend every single year in retirement, say it's $60,000 per year, what you're going to do is you're going to take that number, $60,000, and you're going to multiply it by 25. And what you're going to get is your freedom number. And that is what retirement is. That is where you don't have to work anymore. That is your F you money. You don't have to spend any more time working when you hit that number. And so if you do this simple math, you have your North Star and you have the goal ahead of you and you'll be able to go after and chase after that goal. It's a

• 16:09Andrew Giancola?

  really, really powerful thing that most people need to understand. Now also, once you have that six months expenses saved up, that is when you can start to do some big other savings goals as well. You can start to, if you want to buy a home and you run the numbers on total cost of ownership and you want to go buy a house, that's a great time to do it. If you want to invest in real estate, that is a great time to do is when you have that six months saved in emergency fund. If you want to go out and buy a business, there's a lot of people going out and buying businesses now, myself included. This is the big focus that I have right now. And if you're going out and buying businesses, having that emergency fund in place is going to be imperative for most people. Now, six months is the minimum. And when we're talking about this emergency fund, you can go up to a year, you can go to two years, whatever makes you comfortable. But six months is the minimum

• 16:51Andrew Giancola?

  that every single person needs to have in order to make sure that they are protecting their money and having the ability to build wealth going forward. Let's jump into the next one, which is 55. Now, 55 stands for 55%, which is what we want to cover your baseline expenses. Now, again, with everything in this, I want you to be in a range. So 50 to 60% is the range that I want you to be in for your baseline expenses. These are your bare bones expenses that you need to have to survive, to live, all of those different things. By 55 is right smack in the middle. And so we are going to say 55 for most people. Now, here's the thing I want you to understand, is that most people spend a lot more than 55% of their income on living expenses. In fact, the US Bureau of Labor

• 17:34Andrew Giancola?

  came out with a study and it showed that on essential costs, people spent a lot more than what we're talking about here. In fact, they spend way too much. And this is why most people can't get ahead with their money is because they're spending too much with their money. They spent 33% on housing. What is our rule? Our rule is to spend a lot less than that. In fact, I want you to spend 30% or less on housing. This means their rent, mortgage, property taxes, all those different things. They spent 17% on transportation. If you spend 17% on transportation, something else in your budget has to give. And that means most likely you're going to spend way, way less on things that you love or future you. And for a lot of people, this is car payments, this is gas, this is insurance. 13% on food on average, which is

• 18:17Andrew Giancola?

  groceries and dining out, and 8% on healthcare, which is absolutely necessary. Now, what classifies as baseline expenses? This is going to be your rent or your mortgage. This is going to be your utilities, groceries, insurance that you need, transportation, and a big one that most people don't consider is debt payments. Your debt payments are required to be paid back. And so that is going to be part of your essential expenses because you need to pay that back. If you don't pay that back, you are going to get yourself into a ton of financial trouble. And so making sure we factor that in as well is going to be really, really important. Now, a Harvard Business Review study shows that as income increases, baseline expenses will also increase over time. And this is called lifestyle inflation. We've talked about it a number of

• 18:59Andrew Giancola?

  times. But what we want to do is A, first, we want to figure out what our baseline expenses are. And so we talked about this in the recent paycheck to paycheck episode where I said, hey, print out the last three months of bank statements and underline anything that falls into these categories. Housing, transportation, food, healthcare, debt payments. Those are going to be your big baseline expenses. Now, obviously, other things are going to fall into play there. Maybe you have daycare costs if you are someone who has young kids. Maybe you have clothing items in there that you're going to have to, you know, that's a necessity. It is something that you absolutely have to have. And so there's going to be things that are necessities, but you've got to figure out how to quantify what a necessity is. And so auditing your spending and listing those essential expenses is going to be very, very important.

• 19:44Andrew Giancola?

  And as you go through this, you're going to realize pretty quickly when you audit yourself that you're spending way more than you actually think you are on housing, on food, on transportation, all these different things. So first, let's look at housing. At housing, you should be spending 30% or less of your income on total housing costs. This is why we have you run total cost of ownership when you go and buy a house, because most people go and buy a house willy-nilly. They don't think twice about what the additional cost would be outside of their mortgage. They look at the mortgage and say, "Yeah, I think I can afford that." And they don't think twice about the other costs associated with owning a house. There are tons of different costs associated with owning a house and/or even renting a house, and you have to factor all of those in. So we created this spreadsheet called the Total Cost of Ownership spreadsheet. It's completely free if you go to

• 20:29Andrew Giancola?

  mastermoney.co/resources. You can utilize that spreadsheet, and that will show you how to run the numbers on buying a house, and if it's better to rent or buy in your area. At the time of recording this, right now, for the majority of people in the United States of America, you are much better off renting than you are buying a house. And people say to me, "Well, you're going to build up equity in that house over time, and yada, yada, yada." Run the numbers. If you do not run the numbers, you have no idea what the actual math is. And most people don't understand the actual math, because there's a lot more costs associated with owning a house, even people who own homes. And this is the interesting part about this. You have to do the math. If you don't do the math, you have no idea what the actual costs are.

• 21:13Andrew Giancola?

  So just check out that spreadsheet. We made it for you so you could run the numbers on the biggest purchase of most people's lives, which is their house. And most people don't do that. And so I want you to be able to do that with the TCO spreadsheet. Secondly, is transportation. Now, for a lot of people, they are overspending on transportation because they have a jacked-up truck, or they have the fancy SUV which is hauling kids around, and they're way overspending on those. Listen, I have a truck. I drive a truck around. I love driving a truck. I don't think I would drive anything else. My wife has a big, giant Suburban. We drive around in a fancy SUV. But we ran the numbers to make sure we could afford those prior to making those purchases. If you've got an 890

• 21:54Andrew Giancola?

  $100,000 car payment, you are most likely spending way too much on transportation because that doesn't even factor in insurance and it doesn't factor in gas usage as well. All three of these together need to be a much smaller expense in your lineup. So let me show you how to figure out what this is. Let's say, for example, you want to go out and buy a new car. Well, first, when you buy a new car, you need to be make sure that you are putting 20% down. Because the last thing I want you to do is drive off the lot, get into some sort of accident, and now you're underwater on that car. Sure, you can also buy gap insurance and you can compare those costs and see which one is best for you, but it's got to be one or the other. Secondly, is you need to make sure that your car note is four years or less.

• 22:35Andrew Giancola?

  If you are extending your car loan out so that you can have lower payments, that is a huge sign that you are spending way too much on that car. You do not want to have extended payments out for six, seven, eight years. I don't want you to have car payments for the rest of your life, every single month for the rest of your life. I'd rather you have years where you don't have car payments, so you can take that extra cash and put it towards wealth building activities. You're going to build so much more wealth if you have less months with car payments. So shrink those down, make sure they fit in your budget, which is the third item. Seven, 7% or less of your income should be spent on car payments. The average person spends 17% of their income on transportation. I want you to spend 7% or less at least on the payment. Gas and insurance are going to factor in there as well,

• 23:18Andrew Giancola?

  which is probably going to bring you up closer to 10 to 12%, okay? Now, as you get through this, you have 20% down, you have four years or less on the car note, you have seven, and then there's one more number, which is 10. If you buy a new car, at a minimum, I want you to plan on driving that car for 10 years. At a minimum, not four, not six, not seven, and it's kind of getting raggedy inside, so it's time to trade it in, 10 years. Why? The longer you drive those vehicles, because vehicles can last a long time now. It is 2025. For most people, vehicles will last a long time if you buy a quality vehicle. And so 10 years or more is what I want you to drive for new cars. Now, if you buy a slightly used car, I still want you to try to drive it 10 years.

• 24:03Andrew Giancola?

  I have driven every Every single car I have ever had for at least 10 years. And I want you to try to do the same. It is so incredibly important to help you build wealth in the long run. That is a huge, huge thing. Next, we have food. Now, food is a big one where I have worked with people in the past and they'll add up their grocery list. And they'll be so shocked at how much they spend on groceries. And the reason why this happens is because a lot of times you may do your big food haul for the week. And then you will pepper in little pickups. And those little pickups can add up over time to really increase the amount that you're spending. It could actually add an additional grocery trip or two if you're not very careful. Secondly, a lot of people will eat out very frequently. And if you add all of those up throughout the month, it can become a very, very big number.

• 24:46Andrew Giancola?

  Specifically, if you're eating out at lunch every single day at work, or if you're doing something where you are spending a ton of time eating out at nighttime, or you're doing a lot of Uber Eats. Hmm, a lot of you doing a lot of Uber Eats out there. Those can really add up. So first of all, if you are ordering Uber Eats on a very, very consistent basis, your boy's got some cheddar cheese, okay? I still cannot stomach the prices of Uber Eats half the time. I will order it if I really need convenience, but I cannot stomach all those additional fees. I mean, it is one of the things that, and I really value convenience. But for some reason, jacking up the price to almost double what I would be paying for it just does not seem logical to me. And so for a lot of people, if you add up those costs, it is a massive, massive difference. Now, listen to me.

• 25:30Andrew Giancola?

  If you have money and you're okay paying that premium, more power to you. If you like convenience, if you love just getting Uber Eats, you don't want to leave your house. You just like ordering stuff left and right. And that's where you like to value spending your dollars. Great. Me, can't stomach those fees. Those fees are way, way too high. But look at your food costs. And I want you to add up those food costs and see where they are landing. Because that could be a huge factor into why you are going way over the 50 to 60% range and not in the realm of 55%. You got to make sure that you're keeping it in that range. Otherwise, you're going to go way, way over. And then lastly is looking at healthcare, which healthcare is something it is very valuable to spend your money on. It is going to keep increasing over the course of the next 20, 30, 40, 50 years. And it is accelerating every single year. It is outpacing inflation. It is something

• 26:14Andrew Giancola?

  That I am honestly a little bit worried about for a lot of people because you got to make sure that you are factoring in healthcare, which is why I think the HSA is very, very important for the long term for a lot of people as well. And then we have debt payments, adding up those debt payments for most of you. Debt is the problem. It is going to be the problem on what has taken you way, way over for most of you. Now, if you find yourself with no money left over and you're spending like 90% of your income on these essentials. It's like all of your essentials are there. That means you probably have an income problem and you need to raise your income. But if you are someone who is spending a massive amount on your essentials, but you've got the 4,000 square foot house. You've got two cars that are leased in your driveway that are brand new. You've got all the toys with debt payments. You've got credit card debt, all those different things. Well, we got a different story here.

• 26:57Andrew Giancola?

  We can fix this pretty, pretty quickly. Whereas if you are someone who is spending 90% of your income on this stuff and you are just doing it on the bare bones, essentials, and you are just trying to get by, then we have an income problem. And so we can figure out there's a spending problem or an income problem pretty quickly just by looking at those two things. And so as you go through this list, make sure you're thinking through how to operate in this way. Now, as time goes on, I also want you to just be conscious of lifestyle inflation. Lifestyle inflation is when your income increases, so does your baseline expenses. Some lifestyle inflation is great. In fact, you know, as time goes on, you start to have a family and so maybe you upgrade your home. And then you have kids and maybe you upgrade your home again so that you can have more space for everybody involved.

• 27:40Andrew Giancola?

  That's healthy lifestyle inflation, as long as you don't overextend yourself. But if you're the type of person who every single time you get a raise, you try to take on more payments immediately with the entire amount of your raise, then that's unhealthy lifestyle inflation. What we want to do is take a portion towards future you and then take another portion towards increasing our lifestyle so we can enjoy life more. Money is a tool and you got to use the tool to your advantage. We got to create a balance here when it comes to increasing your income. If you are an impulse spender, if you are really quick to take any bonus or anything like that and just spend it within the first month, then we need to really be conscious about the way that we are spending our dollars and looking at our money psychology. Now, a lot of this, if you are a big impulse spender, comes back to the way that you were raised.

• 28:24Andrew Giancola?

  And your upbringing, there's a lot of different things we could talk about there. But for most people, just understanding and being conscious about this is the first most important step. So we have 20 to 30% that goes to future you. We have 50 to 60%, which is the 55 number, which goes towards your baseline expenses or your essentials. Let's look at the last number, which is going towards your true values. My relationship with money has changed a lot over the years. Early on, I thought building wealth was about making more money. Now I know it's really about having clarity. When you know exactly where your money is going and whether you're on track, you make better decisions. That's one of the reasons I love Monarch.

• 29:05Andrew Giancola?

  It's the personal finance app that tracks everything from your accounts and investments to your savings, goals and spending. So you can see your entire financial picture in one place. One habit that's made a huge difference for me is my five minute drill every single morning. I open Monarch, check my spending, investments, cash flow and net worth, and I'm done in just a few minutes. It gives me confidence that nothing is slipping through the cracks. I also love the AI weekly recap because it'll flag spending changes, upcoming expenses, or shifts in my net worth before they become a problem. Instead of reacting after the fact, I can make adjustments early. It really feels like having a financial advisor in your pocket. Write your own money story with Monarch.

• 29:47Andrew Giancola?

  Use code PFP at monarch.com to get your first year of Monarch Core half off at just $50. That's 50% off your first year at monarch.com with code PFP. If you've been listening to this show for a while, you know it's not just me anymore. It takes a great team behind the scenes to make everything happen. And if I had to hire someone tomorrow, I'd want someone who could jump right in and make an impact. That's why I'd use Indeed sponsored jobs. When workplace chaos hits, Indeed sponsored jobs helps you reach qualified candidates faster. Your job gets boosted in search results, so you're spending less time searching and more time interviewing the right people. Plus you only pay for results, which I absolutely love.

• 30:32Andrew Giancola?

  Sponsored jobs posted directly on Indeed. Indeed are 95% more likely to report a higher than non-sponsored posts. That's a huge advantage when you're trying to grow your business. Spend less time searching and more time actually interviewing candidates who check all of your boxes. Less stress, less time, more results. When you need the right person to cut through the chaos, this is the job for Indeed sponsored jobs. And listeners of this show will get a $75 sponsored job credit to help get your job the premium status it deserves at indeed.com/podcast. Just go to indeed.com/podcast right now and support our show by saying you heard about Indeed on this podcast. Indeed.com/podcast. Terms and conditions apply. Need to hire?

• 31:17Andrew Giancola?

  This is a job for Indeed sponsored jobs. It's kind of amazing how much can change in just a single year. Every summer, the kids are a little bigger, a little more independent, and life looks a little different than it did the year before. And it reminds me that while we can't predict the future, we can prepare for it. That's one of the reasons I like PolicyGenius. See, PolicyGenius isn't an insurance company. They're an online marketplace that lets you compare life insurance quotes from some of America's top insurers, side by side, for free. And their licensed team helps you compare coverage, prices, and terms, answers your questions, and even handles the paperwork so you can get the right policy without the hassle. For me, having life insurance isn't about expecting something to happen.

• 32:02Andrew Giancola?

  It's about knowing my family is protected so I can actually enjoy these moments together instead of worrying about what comes next. And with PolicyGenius, you can find 20-year life insurance policies, starting at just $276 a year for $1 million of coverage. Head to policygenius.com to compare life insurance quotes from top companies and see how much you can save. That's policygenius.com.

• 32:27Speaker 01

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• 32:56Andrew Giancola?

  Now, the last one is the 25%. Now, the 25% is a really important part to your wealth building journey because what I want you to do in life is I want you to be able to enjoy your money now while still building wealth for the future. Now, some of you who are absolutely gung ho and your biggest value is making sure that you retire as fast as you possibly can, you may want to shrink this number a little bit. For some of you, you may want to enjoy life a little more because you love your job and so you want to spend more dollars on the now to be able to enjoy things that you love, maybe going on vacations or all these different things. But this last 25% number is going to be spending more on things that you value, guilt-free

• 33:39Andrew Giancola?

  spending, allowing yourself to spend on stuff that you love. And so this is your discretionary expenses. If you love going on target runs and you just love walking through the aisles and grabbing a couple of things, this is going to be part of those discretionary expenses. If you love buying random grilling items because your hobby is grilling, this is going to be part of discretionary expenses. If you love playing pickleball or golf, this is going to be part of your discretionary expenses. If you love going on fishing trips or your vacations, this is all part of those discretionary expenses. And what I want you to understand is that I want you to be able to spend more in this area if you can. So as you start to increase your income, you can start to allocate some of your dollars towards this as well.

• 34:22Andrew Giancola?

  Now, as you start to progress in your financial journey, what you're going to realize is spending money is a skill. And so as you start to develop this skill, you will then be able to add in more of this fun stuff, dining out, hobbies, entertainment, travel, you know. Personal growth, maybe buying books or gym memberships or therapy, all these different things that you can add into this is really, really powerful. Now here's the crazy part. I'm telling you that 25% is the number. Now, this is obviously another range. It could be anywhere from 10% all the way up to 30%. I'm saying 25% because the average American spends 4.7% of their budget on entertainment, including hobbies and recreational activities. In fact, studies from the Journal of Consumer Psychology show that spending money on experiences

• 35:05Andrew Giancola?

  like travel tend to bring more happiness than material goods. And there's also a huge ROI on personal growth. So I really want you to increase this area. Why? Because first of all, this is where you're going to be able to create memories with your family. You can go on those vacations. You can go spend money on experiences. In addition, you can spend more dollars on your personal growth. Honestly, that's going to allow you to make more money in the future. That's an investment. And so because of this, I really do think that if you maximize this area of your life, but you do it intentionally, and intentionally is the key word here. See, what most people do is if they overspend in this area, if they overspend on their guilt-free spending, they do so because they have no intention behind it. They don't plan this out whatsoever. And so if you're really intentional about your guilt-free spending,

• 35:49Andrew Giancola?

  you identify what you absolutely love, you can thrive in this area. Now, if you're just getting started and you realize how valuable certain dollars are and you want to spend more in other areas, that's completely fine. This is a very flexible section, but you got to make sure that it aligns with what you truly value. And so I want you to think through and spend more on the things that you love. That is part of our goals with this podcast is teaching people, I want you to use money as a tool to spend more on things that you love. And the more that you do that, the happier you will be with the success of your money. And so how do we do this? How do we actually maximize this 25% to make sure that we are spending enough? First, I want you to reflect on what truly matters to you. And I want you to talk to your spouse, if you have a spouse, or if it's just you.

• 36:33Andrew Giancola?

  I want you to kind of think through what really matters to you. Is it seeing family more and you want to go travel to see your family and spend more time with them? Is it traveling across the country or taking trips to Europe? Or taking trips to other countries? You want to visit other countries? And experience different things. Is it spending more money on hobbies? Are you someone who is super interested in very specific hobbies? And you love spending a lot of money on hobbies. Maybe you love gaming. Maybe you love Legos. There's a lot of Lego hobbyists out there. But define what you value. Define what you want out of this life. Maybe you love investing in cars and car parts. You love fixing up cars. Maybe you love Pilates and you want to buy your own Pilates machine. Maybe you love fitness and you want to invest in your own home gym. It all comes down to what brings you joy. I want you to allocate more dollars towards that section.

• 37:18Andrew Giancola?

  The average person spends 4.7%. Guess what? I want you to spend more. I want you to be able to spend more of your dollars, but you gotta be intentional. Now, if you are living paycheck to paycheck, you are on a tight, fine line. This may sound like a pipe dream to you. But if you can learn how to increase your income, we can start to balance out this so that you can manage your money like the top 1%. The top 1% get to allocate a lot more dollars towards these things because they have a higher income coming in. And so if we can focus our time and energy on increasing our income so that we can get to this point in time, this is where the sweet spot is. Secondly, is once you start to have a little bit of extra money and you can allocate some more money towards this, I want you to budget for fun and growth. I want you to create dedicated accounts that are going to allow you to budget towards this.

• 38:03Andrew Giancola?

  This is why we love the bucket method, because you can put some of this money in a high-yield savings account if you're saving for a vacation, or maybe you want to buy a new car, or maybe you want to buy something else big. But you can start to allocate dollars towards some of these things and budget inside of those accounts. And that's what I love about this system. Also, I would automate it in there every single month so that you can think through it. Now, there's a bunch of different ways that you can do this. You can put it towards your values. You can put it towards your fun money. You can put it towards personal growth. There's also a ton of different benefits. You get joy and fulfillment out of spending on some of this stuff. You get to align your priorities on what you actually want your dollars to do. You get long-term happiness in terms of you get all these memories and experiences. You're going to be able to enjoy those over time. So it comes down to what do you want to intentionally spend your dollars on?

• 38:48Andrew Giancola?

  Spend more on that. Now, there's a ton of different examples out there from convenience to health to... There's so many different cool things that you can use. With this and it really comes down to every single person's personal preference. So if you have a bunch of priorities, if you have a bunch of things that you want to spend more dollars on, make a list of them and order them from most important to least important and start allocating dollars towards those. Even if it's small amounts of money, let's say for example, you want to buy yourself a Rolex watch. Okay. You love watches. You love everything about watches. You've always wanted a Rolex. And so you want to buy a Rolex watch. Start allocating a couple of dollars a month towards that Rolex watch. Eventually this is going to add up over time. Now this may be something where you're like, uh, this is just pointless. Why am I saving 50 bucks a month towards my Rolex watch?

• 39:30Andrew Giancola?

  Because over time, at some point in time, you will get there no matter what. If you continually stay disciplined on doing this, and I think for a lot of people, they don't realize that taking small actions towards something actually can lead to very, very big results. And as you start to make more money, you can increase the amount that you're putting towards that. And you're just going to hit that goal so much faster. So listen, I hope this episode helped you learn how to spend and manage your money intentionally, because that's what it all comes down to. It's not about how much we make always. It's about how much we keep. But if you do not make enough, I want you to spend as much of your time as possible on learning how to increase your income and investing in yourself.

• 40:10Andrew Giancola?

  We just had an episode recently, if you haven't heard it, teaching you very specifically how to invest more in yourself. I want you to go back and listen to that episode because these episodes all are starting to intertwine to show you how to be your best self, how you can live a wealthy life in every single area of your life, from your health to your relationships, to spending more time on things that you love. And that is what I want for each and every single one of you to be able to live your best life. Listen, thank you guys so much for listening to this episode. We truly appreciate you being here and thank you so much for investing in yourself because it's exactly what you're doing when you listen to this podcast. I hope you guys are having a wonderful week. Make sure you follow this podcast because the next episode is going to be awesome. I'll see you on the next episode.

• 41:07Speaker 02

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