How to Manage Your Money like the 1% (Do THIS every time you get paid!)

About this video

• Video Title: How to Manage Your Money like the 1% (Do THIS every time you get paid!)
• Channel: Investing Simplified - Professor G
• Speakers: Professor G
• Duration: 10:32

Overview

This video explains how to manage and divide your paycheck effectively, offering advice for both beginners and experienced investors. Professor G outlines a tiered approach to financial management, starting with essential steps like securing a 401k match and building an emergency fund, then progressing to investing in a Roth IRA and taxable brokerage accounts. He also shares his current income allocation strategy, which includes tithing, living expenses, vacation savings, investments in brokerage accounts, crypto, and funds for future business ventures.

Key takeaways

• Tiered Financial Management: A step-by-step approach to financial growth:
  • Tier 1: Take advantage of your employer's 401k match for "free money."
  • Tier 2: Save at least $1,000 for an emergency fund to avoid high-interest debt.
  • Tier 3: Start contributing to a Roth IRA, noting its tax-free growth and accessibility for contributions.
  • Tier 4: Simultaneously grow your emergency fund (aiming for 3-6 months of living expenses) and invest in a taxable brokerage account.
  • Tier 5: Consider other options like HSAs, 529 plans, maxing out 401ks, and diversifying into assets like Bitcoin, gold, or real estate.
• Early Paycheck Allocation (when starting):
  • Tithe: 10%
  • Living Expenses: ~50%
  • Debt Repayment (school/business loans): ~25%
  • Emergency Fund/Roth IRA: Remaining 15%
• Current Paycheck Allocation (2025):
  • Tithe: 10%
  • Living Expenses: ~20%
  • Vacation/Experiences Fund: 5%
  • Brokerage Account (3-fund portfolio + stocks): ~50%
  • Crypto (Bitcoin & Ethereum): 5%
  • Business Ventures/Market Dip Fund: 10%
• Importance of Time and Compounding: Starting early, even with small amounts, allows compound interest to work in your favor over time.
• Generational Cohort Theory: The video touches on Tom Lee's theory that bull markets may coincide with the peak participation of generational cohorts in the workforce, with millennials expected to peak around 2035, potentially extending the bull market.