How Much Should You Spend on Fun Stuff?

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Traditional advice follows the 50/30/20 model: 50% on needs, 30% on wants, 20% on savings. But I don't agree—here's the number I landed on instead, and how spending less on the "fun stuff" supercharges your financial freedom timeline.

This show is a production of Morning Brew and is produced by Henah Velez and me, Katie Gatti Tassin. Devin Emery is our Chief Content Officer. Our video editors are Christie Muldoon, Sebastian Vega, and Nichole Friedman. Additional fact-checking comes from Kate Brandt.

Reminder: I am not a licensed financial professional and this is not financial advice.

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I’m Katie, a personal finance content creator on a mission to make everyone else as obsessed with their financial health as I am. With small tweaks and just a little more awareness, you can live a richer, happier life. I started writing about money in 2018.

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00:00 - 50/30/20
00.51 - Optimal Breakdown
01.20 - 12% Breakdown
02.22 - 40% Save Rate
02.52 - Phases of Life
04.23 - Higher Salary Luxury
05.05 - Compound Interest & ROI
05.32 - OUTRO

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Комментарии

PLEASE run for office now! I’ll ecstatically donate to your campaign AND vote for you and your Universal Daycare platform!!!🤜🏻🤛🏻

elizabethnance

Sharing this with the homies . All my friend admit were afraid to learn about money and it's time to change that

thousandstar

The most important part of the 50/30/20 rule is the "50." The rule was designed to maximize your resilience to financial shocks, like job loss, long-term illness, or divorce. All of those things can reduce household income by about 50%. So if you can fit your fixed expenses within 50% of your take-home pay, you can withstand just about anything life throws at you.

The breakdown between the "30" and the "20" is less important, because you can always cut the "wants" spending later if you need to. If you value early financial freedom and want to save more than 20% of your income, I don't think anybody would say that's wrong, as long as you're not burning yourself out. But if you want to live it up and spend a lot on wants (and I agree, 30% is a LOT to spend on wants), that's OK too.

Note that the 30% on wants also includes donations to charity. That's important to a lot of people.

And yeah, cutting your fixed expenses to 50% of your income is hard, especially for young people these days. But it's never been all that easy for anyone. There wouldn't have been any point in articulating the rule if everyone was already following it.

johannamiller

For myself personally as someone who doesn't have W2 income, I find a tiered bracket system to be much more effective. For my first $3, 100 of monthly income, 10% goes to tithe, 5% goes to giving, 15% is set aside for taxes, and the rest goes into my 'Essential Expenses' account. For every dollar I make above $3, 100 a month, 10% goes to tithe, 5% to giving, 15% set aside for taxes, 35% for lifestyle spending, and the remaining 40% into a business profit/savings account

jared_does_hardmoney

Fun should be relatively free things that give you intrinsic joy like writing, reading, exercising, talking to friends, window shopping.

FINEYOUBABYGIRL

Hi Katie!! Love your content! I earn what I would consider a very good income for someone my age and in my city. However, after hearing your thoughts on the 40% save rate, and now in this video, a 12% fun money rate, I’m not so sure I’m your audience when it comes to my income. 12% (including saving for travel and larger purchases) is barely enough for me to leave the house. Can you elaborate on what you mean by “high earners” to whom this advice applies? I want to know if this is advice targeted at ME, or someone with a different income.

cottonstatesbabe

60% is saving/investing, 30% needs, 10% wants, and 10% feels like I spent too much on pointless things.

jacobside

I use 50/30/20 as a guideline. Keep my wants under 50. Needs always at 20. And save at least 30. If my wants falls to 45 then my saving jumps to 35. Point is I try to keep overhead low, still get to enjoy the present, and preparing for the future.

CarlosRamos-xrrj

I think this is a great rule to live by but it's also important to remember these aren't hard, steadfast numbers. You'll have to adjust according to your lifestyle and obligations just like Katie mentioned! One should strive for financial freedom though!

ludtjkz