How Do You Manage Money

If you want to manage your money like the 1%, I’m revealing the 75/10/15 rule that allows you to build wealth, regardless of how much you earn. It’s a system that adapts to your income level, whether you earn $10,000 or a million dollars a year. No matter how much you earn, you will always follow these three steps.

How Do You Manage Money in 2025

The 75 in the 75/10/15 Rule:

First, for every dollar that you earn, 75% or 75 cents of it will be the maximum amount you can use to spend to buy things—housing, food, vacations, and Mr. Magic lamps. If you can spend less than 75% of your income, that’s fantastic, but the beauty of the 75% limit is that it gives you flexibility and encourages you to do two key things.

First, it forces you to look for cheaper alternatives—premium gas or regular, organic free-range guacamole or regular, Whole Foods or Aldi. Most of the wealthy people that I know share this common trait, which is what I noticed after starting my own business and networking with other entrepreneurs.

Which honestly is a big deal for me because I’m naturally an introvert. But the most unexpected and revealing moment was when a bunch of us went out for dinner after an event, and everyone was asking the waiter for happy hour specials and the cheapest wine they had. And I kid you not, when the bill came, people literally pulled out their phones to calculate how to evenly split the bill so everyone only paid for exactly what they had—down to the last cent. And keep in mind, these people were all millionaires.

Next, the 75% limit forces you to focus on value. You’ve probably heard countless times before to stop buying coffee and instead save and invest that money. But I believe that’s the wrong way to look at it. Instead, before you make any purchase, you should ask yourself, How much do I value the thing that I’m buying?

If that $5 iced coffee makes you the happiest person in the world, makes you more productive and social, and reduces your stress for the rest of the day, then chances are the value you get from that cup of coffee is way more than the $5 it costs. So go get it.

Instead of grasping at the little purchases and attempting to save money, it’s more effective to focus on the bigger expenses—a brand new car, a 100-inch TV, or a cheese dispenser. The thing with big purchases is they’ll make you happy for a temporary amount of time, but after that initial honeymoon period ends, your happiness level is right back where it started. Then that $70K car just becomes a regular old car with the same functionality as every other car.

So, if you manage to spend less than 75% of your income, like you only spend 60% of it, then I need you to hold on to that 15% difference because I’m going to show you what you need to do with it in a bit.

The 10 in the 75/10/15 Rule:

Next, the 10 in the 75/10/15 rule says that for every dollar you earn, you should save at least 10% or 10 cents of it for this thing called a cushion fund. A 2022 study found that as much as 56% of Americans can’t afford an unexpected $1,000 expense.

Think of your cushion fund as a cash reserve that’s specifically set aside for financial emergencies. And emergencies don’t include a wild night out, vacations, or fried chicken cravings. This money should only be used when pretty much all hell breaks loose—when your house gets flooded, when you get stranded in the middle of nowhere and have no other options—basically, when your life is FUBAR.

About eight years ago, I got into a really, really bad car accident that pretty much destroyed the front of my car. I was in a completely different state, and I didn’t know anyone, but the mechanic said that it was going to cost about $15,000 to fix. I was really stressed out because I had no idea how I was going to come up with this kind of money. I even considered taking on a loan, even though I knew that the interest for it would easily cost way more than that amount of money.

But then I remembered that I had my cushion fund saved for emergencies just like this.

The good news is that determining how much you actually need in your cushion fund is simple. Open up a spreadsheet and take account of all your monthly expenses—rent, pineapple pizza, and bills. Multiply this total by five. If your monthly expenses are $2,000, you generally want to save for five months of expenses.

So your cushion fund is $10,000.

Once you have your total, you need to commit to saving this amount. I built this savings goal tracker to help me save money a lot faster. I just put in how much I want to save, and then I can track my progress and visually see where I’m at. For a limited time, I’m giving away my ultimate savings goal tracker for free with the link below.

But what’s even more important is where you store your cushion fund. While most people keep their savings in a traditional savings account like Chase or Bank of America, there are much better places called high-yield savings accounts (HYSA) because they give you much higher interest rates, which allow you to grow your money a lot faster.

With traditional savings accounts like Chase, the national interest rate is 0.5% APY, meaning if you put $10,000 in the account, at the end of the year, the bank is just going to give you $57 in interest, leaving you with $10,057.

On the other hand, a high-yield savings account can offer you 4% APY, meaning at the end of the year, they’ll give you $400 in interest, leaving you with $10,400. I’ll leave some high-yield savings accounts you can check out below.

But an even bigger problem is that most people don’t know when to stop saving money. The reality is you don’t always want to just save your money forever. Once you have your five months’ worth of cushion fund, stop saving and just hold on to that 10% amount you were going to save, and I’ll show you what you need to do with it next.

The 15 in the 75/10/15 Rule:

The 15 in the 75/10/15 rule says that for every dollar you earn, you should invest at least 15%, or 15 cents of it for your future.

There are two specific accounts you should start investing with to optimize your taxes. You basically want to funnel any extra funds that you have into this particular step because the whole point of the 15% rule is to put your money to work so you can build assets and wealth. Because real wealth is built by owning assets.

The problem is that we were only taught how to make money from our work and labor. That’s pretty much what school teaches us: how can you get a high-paying job? But the wealthiest people in this country don’t make their money from their job. They make their money from their assets.

After reading Rich Dad Poor Dad by Robert Kiyosaki, I realized that you can be completely broke with a high-paying job. But if you have assets, you can spend all your money today and still be wealthy next month.

Unfortunately, like many people, I never learned this in school, nor did our parents teach us this. I pretty much had to go out of my way to learn this from reading and studying finance with books like The Psychology of Money and The Intelligent Investor.
But this is one of those things that once you learn, you can never unlearn it. But if you don’t learn it, you might never learn it. And if you don’t learn it, you’re never going to be able to build true wealth.

The 2 Accounts to Start With

There are two specific investment accounts you should start investing with because of major tax advantages.

First is the Roth IRA, which is an individual retirement account. The main advantage of having a Roth IRA is that your earnings and profits grow tax-free. That means when you retire and withdraw all the earnings, you won’t pay any taxes on it at all.

For instance, Peter Thiel famously grew his Roth IRA account to $5 billion. And what’s wild is that when he decides to withdraw from it, he’s going to pay $0 in taxes on it.

The caveat is that you can only contribute money that has already been taxed, meaning after you received your paycheck.

The Roth IRA benefit is so great that the government limits how much you can contribute to it. In 2024, if you’re under the age of 50, you can only contribute $7,000 a year into a Roth IRA. And if you’re over the age of 50, you can contribute $8,000 a year. It’s a pretty straightforward four-step process to both open and contribute to a Roth IRA.

First, you need to have what’s called earned income, meaning that you need to get your income working for someone else. If you are self-employed or own a business, you can contribute to a Roth IRA.

Second, you want to go to any brokerage website, like Fidelity, Schwab, or Vanguard, and select the option to open a Roth IRA account.

Third, once you have your account open, you want to transfer money from your regular bank account to your Roth IRA account.

Fourth, please make sure you pay attention because many people completely miss this step and wonder why their Roth IRA account hasn’t grown in 20 years—it’s because you actually need to purchase investments in the account.

Don’t worry about what you should invest in; I’m going to share my favorite investments later, where you can basically just set it and forget it.

The second account you should invest in is the 401(k), which is an employer-sponsored account, meaning you can only have a 401(k) account if you work for an employer that offers it. But thankfully, many companies do.

Unlike a Roth IRA, all your contributions to the 401(k) are made with pre-tax dollars, meaning you’ll pay taxes on the money later. The idea is that many people’s incomes will be lower when they retire, so they expect to pay less in taxes in the future compared to now.

You basically assign a portion of your paycheck to be contributed to the 401(k), and this account has a much higher contribution limit of $23,000 per year as of 2024.

One of the biggest advantages of the 401(k) is that many employers offer an additional benefit where they match your contributions—essentially giving you free money.

The most common employer 401(k) match is a 100% match for the first 3% you contribute, with a 50% match for the next 2%. It might sound confusing, but here’s an example:

If your salary is $65,000 and you maximize your contributions up to the employer’s match, you would contribute 5% or $3,250 in a year. In return, your employer would immediately match and give you another $2,600 for free—no questions asked. Totaling $5,850 in your 401(k). Again, this is basically free money for you and your retirement in the future. So if your employer offers this, it’s an absolute no-brainer.

But what should YOU invest in?

Once you have either one or both of these retirement accounts, you need to figure out where to invest your money. Before I tell you what I personally invest in, here’s a practical reason why the wealthy invest in assets: If you invest just $100 every month for 50 years at an average return of 10%, you will have contributed only about $60,000.

But over time, through compounding in the stock market, your total portfolio value would be $1.4 million. Also, Moomoo, the investment app that I use.

For most people, investing in an index fund or ETF is all they really need to do. Basically, instead of investing in one stock that can either go up or down, with an index fund or ETF, you invest in hundreds of different stocks, automatically diversifying your money and reducing your overall risk.

Meaning you can pretty much set it up and forget it. For example, if you were to buy an S&P 500 Index Fund, by buying that one fund, you would own a small percentage of every single stock in the S&P 500.

Thus, you track the entire index, which automatically provides you with diversification because your investment is now spread across the top 500 companies in the U.S.

And by buying an index fund, it’s actually a lot cheaper than buying into each of these 500 companies individually.

Index funds are usually a great, safe bet in a retirement account because, based on the average over the past 80 years, index funds have returned about 8% per year.

Some years are naturally going to be higher than others, but on average, you can expect your money to grow and compound over time.

So with most of my money, I invest in passively managed index funds like FXAIX or VOO because it’s easy and really straightforward.

But you can invest in whatever you’d like—there are a ton of ETFs and index funds out there.

And if the funds that I choose aren’t available in your 401(k), you can just look for another type of index fund that invests in a lot of U.S. companies, and you should be pretty golden for the most part.

And if you are Indian, then you can invest in the US starting from 1000 Rs. The simple way is just like you invest your money in the Indian market. You can use the link below to download the application, create an account, and invest in the US market and diversify your portfolio.