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MG also says that those are goals over time.... When you get a promotion or higher paying job.... keep creating this scarcity.

25% on housing. Laughs in Californian.

It's crazy how wildly unaffordable home ownership is in places like California or New York unless you're in like the top ~5% of earners.

with these rules applied you should have 42% of your take home for discretionary spending correct? that should be enough if you want to be saving 25% and putting 25% in housing. you either need to earn more or spend less not sure which one you gotta figure that out.

Not unaffordable, people just budget completely differently here.

> For fun I did a mock budget of my take home pay after 25% investing and 25% house payment and with taxes, insurance out of the way and all that, I only had enough money to cover my typical expenses and had no margin at all for anything "fun" or even short term savings goals.

So it's apparent then that Money Guy's numbers are base on an income that's greater than yours. All of the popular money "experts" advice is based on generalities. You take the advice and adjust your percentages to meet your personal financial situation. The money experts also cannot account for every municipality in the U.S. I'm sure someone making median income in San Diego (may not be still be current but I used this and this as sources) would be hard-pressed to find adequate housing for 25% of their income.

If you have a car payment according to the rules you are left with 42% "gross" left not take home. Now take out your taxes and insurance and that's what you are left with. That is going to be individual.

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I don't think they have ever said that the rules they have set apply to X income and up. Regardless though, I do think the advice they give is "aspirational" like another comment has said, not necessarily that if you don't do that exactly you are going to fail. I feel like I make a decent income at 110k in a relatively lower cost of living area, I just am having a hard time penciling out how to follow their advice and not be a miser at the same time. Maybe as a single person I'm not seeing the same kind of deductions that a married couple would be granted. I don't know.

While I definitely feel for the people in HCOL areas, I think at the end of the day there is a point where math is going to say you can't be living there, However, if you do want to live there, you are either going to have to make more money or be content with making some sacrifices in your investing goals/lifestyle.

They may not say it, but it's quite obvious that essentials (housing, grocery, utilities, insurance, health care, etc.) take up a larger percentage of the income of someone at the median than of someone in the top 10%. It's also quite obvious that if you are supporting 4 people vs. 1, essentials will take up a much larger share of your income. It seems to me a lot of these gurus assume everyone is childless and making 6 figures.

I do think they put a bit of wiggle room in both 25%.

Where I think the 25% savings goal is just that. A goal. Where if you currently below that, it should be where you try to get as your career/life changes.

Same with 25% on housing. In a LCOL area, maybe you spend less on house and can spend a bit more somewhere else. And for our HCOL friends, maybe they need to live with a lower transportation spending.

If saving 25% of your income is not feasible for you right now. That’s fine. But hopefully you get there.

Percentages are good for rules of thumb but often crap for individual circumstances. Why?

If I told someone who made $40k a year that they had to put 25% of pay into investments, 25% into a house and 8% into a car (gross income) leaving them with only 43% of their pay for all their other expenses and whatever else they wanted they would quickly realize that would mean. $833 on a house a month, $833 into investments a month, $267 into a car a month and after taxes that would only leave them with $1120 a month for literally everything else. That wouldn't really work for them.

If I said the same thing to someone making $400k a year I'd basically be telling them they would have to live on only $11,200 a month at which point well yeah no problem.

Its not the same thing. That doesn't make Money Guys wrong, they are trying to give advice to a broad group of people whose incomes range all over the place...but that advice only actually fits the mean income, everyone else its going to be a bit off and further out its going to be really really off. So don't follow it blindly, if it seems off to you...its probably just off.

I mean if I tell you the percentages my budget breaks down to I bet you would have a pretty good guess at what my income is if you think about it.

I'm 14% housing, 2% car, 40% investment leaving about 44% of gross left over (which of course the net would be after tax)

>I don't think they have ever said that the rules they have set apply to X income and up.

But yet it obviously is based on income. I mean you seem like a smart person, take some time to think about it. What would that percentage budget mean for someone making 30k versus 300k.

When gurus like this give advice they HAVE to give generic advice because they aren't talking to you, they are talking to literally anyone who watches them. So their advice is given to fit with the mean basically, so that in a random set the advice will be decent for most people. That doens't mean its good for everyone. The concepts are sound, but never just blindly apply percentages to your savings or budgets,

Exactly...so you do understand why percentages don't fit all incomes then.

Good points. That's impressive investing percentage, hats off to you!

Its a lot easier with a higher income. That isn't meant as a flex, its just true because of how percentages work. You don't live of a percentage, you live off a certain number of dollars per month. Just because I start making more doesn't mean I'm going to lose my mind and start just throwing money away for no reason.

I've watched the Money Guy Show before by the way and I think they give solid advice and are some of the better personalities out there for financial advice so not trying to dunk on them. Pretty sure they would agree actually.

The thing is, is the MG is usually pretty transparent about the income stuff but not here. Like for instance they do say that if you are single and make under 100k a year you can include your employer match as part of your total 25%.

I agree with you income does obviously play a huge part if you crunch the numbers. It just seems odd to me that they are very transparent on income on some advice and not others. But you make a good point, they can't possibly give a one size fits all number here that makes sense for everything.

I mean in this case I think those numbers are meant as an upper bound not as a suggestion. IE you shouldn't spend more than 25% on a house, you shouldn't spend more than 8% on a car...not that you SHOULD spend that much. So it doesn't really make sense to expect to be comfortable if you are hitting what they are saying is the maximum for housing AND car.

Viewed that way my percentages of 14%, 2% and 40% all match up really...I don't spend more than 25% on housing, I don't spend more than 8% on a car. I do invest or save at least 25%. I don't think spending 8% on a car is meant to be a goal just meant to say if you are spending more than this you might want to reconsider. Again as a guideline.

As other posters have pointed out there are parts of this country where unless you are in the top 5% you are absolutely not spending only 25% of your income on housing. That just isn't a thing. Maybe Money Guys would suggest that means you are in an area that is overpriced for your income and you should try to move I don't know but I think they know that, they are just trying to give broadly applicable advice and not focus on the edge cases of very HCOL areas or very high or low incomes.