(And no – this is not an April Fool’s joke… though now I wish I would have come up with something more fun to trick you all on :))
As I was going through some rabbit holes online yesterday, I came across this gem by the one and only Angelina Jolie and my
pants jaw just about dropped to the floor.
“Save one-third, live on one-third, and give away one-third.” – Angelina Jolie
Wow! What a budgeting strategy! Once again proving just how sexy budgets truly are… After all, if Angelina Jolie is sexy and she budgets, then ipso facto budgets must too must = sexy! BOOM!
We can all go home ladies and gentleman :)
But let’s not, yet… let’s talk about what this actually looks like in real life and if we can ever pull it off ourselves!
I tried to research this quote further to see if she really DOES budget like this or if it was just an off-handed comment, and while I didn’t get a straight answer anywhere (the quote itself derived from an interview she did with CNN in 2005 when asked what she does with the money she makes each year), I did find this particular line enjoyable from an interview a year later w/ Anderson Cooper:
When CNN’s Anderson Cooper marveled that she gives away a third of her earnings, Ms. Jolie laughed. “Yes, well, I have a stupid income for what I do for a living,” she said.
Haha… At least she knows what’s up :)
But whether she actually manages her money like this or not, it doesn’t matter for today’s purposes as the concept itself is well worthy of some paying attention to. Let’s break it down, shall we…
I. Living on one-third of your income
If you can pull this off, you’re essentially left with TWO-THIRDS of your income leftover to do whatever it is you please!! Save it, invest it, give it all away, work less – you are completely empowered and have about a billion options at your disposal.
This is the key to everything financial – having more money coming in than you’re spending.
Paying your bills on time and having enough to get by is fine if you want an average life, but if you’re looking for something MORE – something that you can hold onto and really build on over time – then “average” isn’t going to cut it. You’ve got to challenge everything and find where you’re leaking money and how you can expand that gap even more. Something that can benefit anyone, movie star or not.
II. Saving one-third of your income
I’m not sure if Angelina mentioned this part first on purpose or not, but I’m going to assume that she did because she believes it’s all about *paying yourself first* and then living on/spending the rest.
And I wouldn’t hate her for that :)
If you can divert a chunk of your money the second you get a paycheck before it all goes out, you wouldn’t have to worry anymore whether you’re doing “the right thing” as it’s already taken care of. And the actual act of doing this is super easy these days simply by automating deposits through your HR dept or by setting them up through banking/investing institutions. You’ll have to be able to live off the rest of the money of course, but technically it’s one of the easiest things to set up. And you can start with as little as 1% or even $1 dollar too if you can’t quite get to 33% yet. Honestly, these days I’m not even saving 33% – as evidence of the latest cash flow dilemmas going on… We all go through phases.
III. Giving away one-third of your income
I can’t even imagine what this would feel like – especially at Angelina Jolie levels – but it’s quite obvious that if you can do this month in and month out, you would score so much karma and play such an amazing role in giving back to the community. Something I struggle with myself, as you know, but feel incredible doing every time I’m actually able to pull it off. And just like saving or investing, you can again start with micro amounts and slowly move them up from there.
In fact, while I currently work to create a brand new philanthropy project myself in the near future, I’ve decided to pick at least one place a month to give a little money to to get the ball rolling. Sometimes I’m able to give a few hundred, and others only $20 or $50, but no matter how big or seemingly small it is, I know that every single dollar in the end can make a world of difference. Just like our beautiful starfish in that popular allegory.
Actually, here – let’s post it! We’ll be two for three this week in parables :)
A man was walking along a deserted beach at sunset.
As he walked, he could see a young boy in the distance and noticed that the boy kept bending down, picking something up and throwing it into the water.
Time and again he kept hurling things into the ocean.
As the man approached closer, he was able to see that the boy was picking up starfish that had been washed up on the beach and, one at a time, he was throwing them back into the water.
The man asked the boy what he was doing and he replied,”I am throwing these washed up starfish back into the ocean, or else they will eventually die.”
“But”, said the man, “You can’t possibly save them all, there are thousands on this beach, and this must be happening on hundreds of beaches along the coast. You can’t possibly make a difference.”
Without pause, the boy reaches down, picks up a starfish, and throws it into the ocean. As it hits the water, he says, “I made a difference for that one!”
Goosebumps every time…
If you missed Monday parable, you can read that one here: The Mexican Fisherman.
Point is – a few dollars can make a huge difference. Whether in saving, investing, paying off debt – or in this case – trying to make the world a better place.
So am I crushing on Mrs. Jolie’s budgeting skills over there? You bet your sweet a$$ I am. Sure she makes a killing and is blessed more than many of us in the looks/abilities/charisma department, but we can all strive to manage our money in a similar manner or even better. It’s popular to try and hit the 50% savings levels these days – at least here in the personal finance world – but really any of these goals would be incredible to go after. It’s just a matter of figuring out the best path for each of *us*.
Other budgeting strategies…
Here are a handful of other budgeting strategies floating around out there too – perhaps some of these are more do-able/exciting to you?
- The 50/20/30 Guideline — 50% towards fixed costs, 20% to financial goals (saving/investing/debt payoff), 30% to all other flexible spending (wants, likes, charity, blow money). This is one of the most popular methods out there.
- The 60/10/10/10/10 Guideline — 60% towards expenses, 10% to retirement, 10% to long-term savings, 10% to short-term savings, 10% fun money.
- The 35/15/10/15/25 Guideline — 35% for housing, 15% for transportation, 10% for saving, 15% for debt, 25% for life.
- The “Max Out Your Retirement Accounts and Do Whatever You Want With The Rest” Method – one that I’ve been following in recent years :)
And then the whopper of them all, per Dave Ramsey’s The Total Money Makeover:
- Charity: 10-15%
- Savings: 5-10%
- Housing: 25-35%
- Utilities: 5-10%
- Food: 5-15%
- Transportation: 10-15%
- Clothing: 2-7%
- Medical/Health: 5-10%
- Personal: 5-10%
- Recreation: 5-10%
- Debts: 5-10%
As you can see (and probably know by now) budgeting can be as simple or complicated as you want to make it. And there’s no shortage of ideas out there.
Try one out, tweak another, and once you find one that really starts sticking – for the love of God RUN WITH IT AND NEVER LOOK BACK! Haha… You’re liable to drive yourself crazy with this stuff, but you have to go through the process until you figure it all out and find yourself in the Promise Land :) Start from the bottom tracking *everything*, then work your way up from there.
If you’ve already gotten a good rhythm down and need a way to start tracking it all, check out our database of budgeting spreadsheets here, or try services such as Mint.com, YouNeedaBudget.com or even PersonalCapital.com. You match both sides to the equation up and you’ll be high rollin’, baby!
Now tell me, what April Fools tricks have you fallen for today? :) If none, tell us about the way YOU budget instead and hook your neighbors up!
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If you were to do the “math” on a salary of 50k, what does this look like in practice but more importantly, giving a third to charity…what does that look like as a tax impact? Does this result in higher refund come April 15?
Too many questions/variables to answer without knowing your situation more, but yes – generally speaking you would get a nice write-off for large donations like that. Keep in mind these budgeting routes are based on *take home money* too – not salaries before taxes are pulled. But 33% on a $50k salary would def. be a chunk of money and incredible if you could pull off :)
I guess I was thinking if you took rough estimates based on national averages, come tax time, a chunk of your invested dollars (sunk spending) is returned in the form of a refund due to the (dollar for dollar?) deduction. In a way it’s a negative (personally fiscal) return, with a high external positive (moral) impact potential form of savings. So the refund at tax time, since it’s spent money, becomes a sum of money that could be used toward a bonus trip or bonus sum of money that can tackle some (part of a) debt. I know it’s a bit of a fiscal shell game, but it sounds good in my head.
Hey – I’m all about getting those tax refunds at the end of the year and doing something cool/important with it! Most people wouldn’t have “saved” all that money throughout the year anyways, so who cares if it was “giving the government a free loan.” To me it’s a perfect time to stop and evaluate what a nice chunk of money can do, and then hopefully apply it to what’s important in your life!
Our budget goal for 2016 is 50 – 50. Live off of half and save half. 20% is going to retirement accounts, 20% on to the house and then the remaining 10% is increasing our cash balance.
I really liked that this article laid out the different percentages that various financial folks recommend- that was helpful! And good hook with Angelina Jolie.
Had to grab your attention some how :)
@ John C – 50/50 is dope!
We follow the pay yourself first model. We use excel and personal capital to keep track of our plan. All about having a plan for your money and knowing where its going each month.
I was just thinking of the starfish story this morning as I walked through a wet parking lot and saw all the worms that came out in the rain last night but will die on the asphalt today, so I had to make sure to toss at least one back into the grass.
YAY!!! I always feel so bad for those poor worms – it’s a miserable way to go!
For most of us, the AJ budget might only work on a general life timeline. Personally, I like to follow the budget example set by Warren Buffett. He lived extremely frugally and invested his excess cash each year into his partnership. He always had the intention of giving it away to charity, but he knew he could watch it grow many times over and have a bigger impact when he eventually parted ways.
Very true indeed… especially if you’re BETTER at growing money than you are giving it away or other things… do your best to grow-grow-grow and then pass along whenever the time has come! I think I prefer doing a little each month so I can enjoy the process and learn/help people as the years and decades go by, but either way the end result is better than most other things in life. So more power to anyone who gives back – either financially or volunteerily (new word :)).
I am certainly not going to try to disagree with Warren Buffett, because he has obviously done extremely well for himself. My personal approach is to give 10% all throughout my journey toward financial independence. When I reach FI, I will up my giving as much as my situation allows.
Personally, I cannot think of anything that matches the thrill of helping others who are in need, especially when it is done in secret.
Some of those budgeting methods make my head hurt, far too much calculating to do in order to make decisions. I prefer keeping it pretty simple and it seems that Angela has an awesomely, simple, and wise approach to managing her money. I’m sure that her income makes it just as easy to stick with those amounts, but I’m sure it can be applied to any income if someone really wanted to do it.
Agreed. Once you get it all figured out the more simple you can make it the better for sure… In the beginning you have to get down and dirty first to get to that point, but if you do it right you can then hopefully never have to do it again! Unless you’re a nerd and you want to, of course :)
“It’s just a matter of figuring out the best path for each of *us*.”
Love this statement! It’s so true that you just have to experiment until you find a budgeting method that clicks for you.
We simply track every single penny going out and coming in on a weekly basis and evaluate whether we need to cut back in certain areas the next week. We use a modified version of the “Your Money or Your Life” system to keep spending in line with our personal values. We also automate retirement and personal savings – we never even see that $!
I’m a big fan of this strategy for it’s simplicity. I also like that it highlights that your retirement and helping others is equally important as your life now. To be honest, I do not give nearly 1/3 of my money to charity, but I try to make up for that by donating a decent amount of my time to volunteering every week. Hopefully this balances my Karma out.
Yeah, I’m with you, I’m struggling to get my charity up to 10% or one day even 20%… 33% is a pipe dream at this point. I love the idea of being rich enough for that, but am not sure that’s the right number for me unless I got super rich. Right now my priority is funding retirement and saving for all these baby expenses.
Judaism has some sensible – and hard! – guidelines for charity, called tzedakah. It’s one of the reasons why – stereotypes of penny pinching be darned – Jews tend to give so disproportionately to charity, for only being only 0.2% of the world population.
Medieval scholar Maimonides has a hierarchy of levels of giving (Ladder of Tzedakah) so one can engage at one’s level and work up, which I find to be pragmatic and optimistic about individual development. Personally, though, I disagree that anonymous giving to strangers is less virtuous than attributed giving or face to face giving — but I suspect the globalization of the Internet changes things compared to the middle ages.
=Ladder of Charity=
On an ascending level, they are as follows:
8. When donations are given grudgingly.
7. When one gives less than he should, but does so cheerfully.
6. When one gives directly to the poor upon being asked.
5. When one gives directly to the poor without being asked.
4. Donations when the recipient is aware of the donor’s identity, but the donor still doesn’t know the specific identity of the recipient.
3. Donations when the donor is aware to whom the charity is being given, but the recipient is unaware of the source.
2. Giving assistance in such a way that the giver and recipient are unknown to each other. Communal funds, administered by responsible people are also in this category.
1. The highest form of charity is to help sustain a person before they become impoverished by offering a substantial gift in a dignified manner, or by extending a suitable loan, or by helping them find employment or establish themselves in business so as to make it unnecessary for them to become dependent on others.
WOwwwwww fascinating!!! I really REALLY like that #1 on the list! Can you imagine how impactful that would be?? And how great it would feel in doing so??
Man… never heard of this AT ALL before… Thanks for sharing it!
Love it! I had never heard this quote from her. Sounds like a pretty great philosophy to me! Wish I had so much money that giving away a third of it was no biggie. Kudos to her for having her financial priorities straight.
I think your budgeting changes with your life. Now I work, save, spend. Ten years ago I worked, spent (children), save. Putting 2 kids thru private school and then helping with college was more important to me than saving for my retirement. I always felt that if they were raised right with a sold education….they would be self sufficient. So far I feel I made the right decision. I may not retire with $10K but hey ya cannot take it with ya!
Love the parable today…..if all people felt the way the young boy did, we would have a different world :)
Thanks, that makes sense. I’m in the middle of the kid spend, and you articulated what I was thinking better than I could.
Kid stuff changes the picture big time for sure. We’ve taken a major hit across the board over the past 4 years, but I just keep telling myself it’s only a phase and will get better :) Financially speaking, at least – the life department exploded with joy that more than makes up for it (thankfully! haha…).
Here’s a post I did on how much it costs us to raise our 1st kid after 29 months if you want to check it out superbien… Not to scare you away ;)
I think it would be better go save 2/3 now and then give away whatever in the future! But if I had the crazy millions that she does… I’d be singing a different tune!
Here is a fact! … Givers are winners! start giving today no matter how small it is. You become more attractive if you are a Giver! People say that they cannot afford to Give! I say,
“you cannot afford not to Give!” Give to somthing you are passionate about!.. Your Church, your Favorite Charity, Someone in your Local Community that you can actually see the results of your giving! There will come a time in which you hope someone will give and help you when you have a need! … Great Post “J”
I guess that’s how Angelina got so attractive!! :)
O crap. No I have to go and calculate the percentage scale of the strategy we adhere to (thanks actually, love that)!
Our strategy is to pay our fixed expenses (as low as possible), live on a budget (as low as possible) and use everything else to pay off debt with. Works like a charm today, but it never hurts to see if we can improve!
Until we can say we are much like Brangelina in a way…
I’m looking forward to when we’re in a better financial position so we can give back – with money. Right now, we’re saving like crazy and earning extra in order to pay off our debt. We do try to volunteer our time and energy as much as possible though.
Thanks for this post jam-packed with motivation, strategy, and inspiration :)
I think that time and energy are as important – if not more – than money. I mean, think about the doctors setting up clandestine clinics for the injured in war-torn Syria, risking execution to help hurt people. They need money from strangers comfortable a world away – but the real work is done by people on the ground. I give you lots if credit for time and energy!
Edit: To help people who are hurt, not to help with hurting them.
Aaahhh! Angelina, you’re killing me!
I have been firmly on Jennifer’s team for years, but every now and then I read something about how Angelina thinks and acts and…and….and I can’t help but like her a little more. Her spending habits leave me begrudgingly admitting to that.
I’m still working out my budget habits; I’m working towards 50% of my take home pay to go toward debt and plan to make it happen by May 1. I’ll readjust once the debt is GONE.
Woah – that would be hot! 50% towards debt – yeah! Would mean you’re only living off 50% which is more than 99% of the country can do! Keep going!!!! You can do it!!!! :)
(And which Jennifer you talking about over there? Lawrence? Or Anniston/Lopez? I’m thinking Lawrence… that girl is CRAZY good with her finances…)
A good one, J$. However, I’ve been thinking a lot about this one lately and have come to believe that all that deal in proportions (onethird of this or that; 20% of…) is highly misleading most of the time. If we are serious about personal finance – and money management – we have to account for an absolute (like in $15,000 per year but this is a random number) below which one cannot go if they are to keep alive, have any chance of moving forward and look after their dependents. And being on the other side of this relationship, I’m getting a bit impatient with young people who save by moving back home: guys, this only means that you are transferring your money problems on your parents not that you are solving them.
I suppose what I’m saying is that all proportions work only after the minimum has been accounted for. This also means that someone who makes $25,000 will probably find it impossible to live on one third of their income (if they don’t move back home with their parents). Hence, my believe that it is everybody’s sacred duty to increase their income, not only limit their spending – if you make $100,000 per year licing on one third is possible though challenging. Heck, giving away one third is great. (And before you ask, I don’t give away a third of what I earn but will be increasing the amout soon.)
Yeah, I was thinking about this too. There is a set minimum, so living based on percentages only works if the minimum is way more than covered. But that would be the thing I would tackle first before figuring out percentages anyway – like Step 1, figure out how to make way more than you need (side hustles, different job/career, passive income streams, etc). Step 2 – then decide how much to save, spend, and donate.
Mr. BFS and I don’t give very much money to charities ($20 here and $50 there, but probably only a few hundred a year). I give time instead since I will know if whatever charity I am supporting is mismanaging my time or not. In 2015, I volunteered more than 250 hours to SMART Pet Rescue, Texas Paw Party, and Big Brothers Big Sisters (before my Little of 2 years dumped me, lol). I’ve already put in more than 100 hours in 2016. I enjoy volunteering and I use a little of our cash to fill in little gaps instead of being a main donor – both kinds of donations are needed for any charity to work well (cash and time).
As far as percentages go though, we save 20-30% of our pre-tax income and use the rest for padding, expenses, and extras like travel.
Crystal, wow – you are a volunteer rock star!! So impressive! (And love that you tie it to something you believe in deep down too, not unlike your side hustles of pet sitting either :) That’s the way to do it!)
Maria – Agreed. Gotta get down the amounts you need to live off first and then work your way from there. Not sure I agree w/ the part on moving back home with your parents, especially if you’re saving for something specific and have intentions of moving right back out afterwards, but then again I’m not a parent of that age range yet so come check with me in about 14 years :) Love your feistiness though, haha…
When I have Angelina money, I will budget like Angelina. With AMW money, It is 10% into retirement, 5% savings for short term goals, 10% giving, 5% fun, and the rest (70%) for living. But the most exciting part is that this year is looking to turn out financially fabulous and we are going to be able to up that savings (and not give in to lifestyle inflation!)!!!
Hey you rock! Great job on being financially fabulous, and channeling some of that largess to helping others.
Hell yeah! Lifestyle inflation sucks balls…
I must admit, my favorite part of this post is that you used a gif from Gone in 60 Seconds, which is (no April Fool’s joke) one of my top 10 favorite movies of all time. It would be amazing to have the means to give away 1/3, but even just getting in the practice of giving a little, or at least a little time, is a start! One day I’ll get to Angelina level.
And here I was laughing that THAT was the movie he picked to gif ;)
I just picked it cuz she was giving us some kisses :)
It’s a lot easier to do that when you’re making a boatload of money but doesn’t mean you can’t do something similar with a lower income.
We’ve been following something like this:
10% Savings for long term spending
15% Retirement saving
We’ve tweaked the numbers a bit.
That’s pretty good! Means you’re living off half your income :)
I’m shooting for 25/25/25/25: 25% living, 25% short term savings, 25% long term savings/retirement, 25% giving. I’m a little topsy-turvy at the moment, as I’m trying to front-load the retirement savings to semi-retire early. As for the “start small”, this is the year I’m starting small with the giving: 1% of all income (before I would just donate whenever something came up…now it’s consistent). Each year I’m going to double the percentage until I hit 25%: next year 2%, then 4%, 8%, 16%, and stop at 25%. The rest should fall into place, as I’m a natural saver and things are being paid off (home, rental properties, etc.).
LOVE THAT IDEA!!! And the 25/25/25/25 route too, damn… living off only 25% of your income is pretty damn good – congrats!
You should get your own house in order before helping others. Just as you get told on a plane to put your own oxygen mask on first before helping others. If you reach Angelina Jolie level wealth, then 30% of income going to charity is fantastic. But Bill Gates adds a lot more value now in helping people, than he ever could have if he had given 30% of his money away in the early Microsoft Days.
Once your own finances are in order, and you are comfortably heading towards FIRE. Then it makes sense to start contributing more significantly to charity.
Wealthier people spend a smaller portion of their income on necessary expenditures.
There is really two ways to get to her level.
1) Reduce spending to under 1/3 of your income.
2) Increase your income so that only 1/3 is spent on living expenses
Realistically, people with average wages can’t live on 1/3 of it without being destitute. Also, people can’t easily just increase their wages to earn a ton more money.
I think people need to invest in passive income, thus increasing their income to a point that they are spending only 1/3.
Yeah, it def. takes some heart and hustle for sure.
That would be great to donate 1/3 to charity! Right now we both donate time, and probably way to much of it to our nonprofit hobbies (mine is shelter dogs and cats). I’ve generated over $90k for my local rescue through fundraisers I’ve organized and managed in just a few years, but I’ve donated probably just a few hundred in actual cash. Trying to actually step back a little because I’m approaching burn out.
The plan we follow is “save as much as we can while living moderately nice.” So not really anything I could outline for you because “moderately nice” depends on the person. After we have a cushion in our savings (like 3 months of living expenses), we contribute to several retirement accounts so that our actual take home is what we just need to live on with normal everyday spending plus or minus. If the checking starts to grow (I project my end of year checking value based on spending estimates), then that generally means we need to up the retirement contributions even more. Last year we saved over 53% of our gross in retirement accounts and lived on about 28% of our gross. I say gross rather than after-tax savings. After tax would be just the Roths, but the majority of our accounts are pre-tax accounts.
We’re not focusing on the mortgage as we don’t plan to be here long term. I’d downsize in a heartbeat if the right home came along.
I like the idea of spending *time* to raise money for organizations you believe in :) Awesome about only living on 28% too!
Right now I am on like
Live with 1/3
Save and Invest with 2/3
But ideally I want to be like
Live with 2/10
Enjoy with 7/10
Help with 1/10
Hah – nice!
Is “enjoy with 7/10” once you hit financial freedom/retirement? :)
Jolie should pay me for that awful movie Wanted (shamefully saw in theaters)…but hey Gone in Sixty Seconds was great. Maybe her co-worker (Nick Cage) should have taken her budgeting advice…
Anyway thanks for the great article, and the reminder of that sweet sweet mustang.
Hitting one third of my income for savings is my goal. Though I still haven’t met, I think one best strategy to reach that stage is to get a side hustle.
I love that she gives 30% away! It’s easy for people with her income to be selfish with it and spend lavishly without thinking of giving. It’s so refreshing to hear that celebs are thinking about giving, too!
While I’m firmly of the belief that everyone’s money is their own business insofar as telling people how to spend and give, I’m also doubly impressed by people who live in a world almost so far removed from our realities and still make it a priority to give.
I haven’t built charity as a percentage of our whole budget because we’re budgeted down to the penny on the big scale but PiC and I give ourselves an annual spend budget. That’s for anything that’s just us individually, not household, dog or baby: clothes, haircuts, gear, whatever we will personally use. I always put 30-50% of that towards donations or to help others. And if they’re donations to official non-profits, I can get PiC’s company to match our giving. That feels so good that even though I’ve been waiting for that replacement handbag for 3 years, I’d rather wait a little longer and have a bit more to give.
While I love the idea that yeah, we could save as much as possible, invest well, and give a HUGE donation at the end, people and animals need help now. So my philosophy is save a few starfish each year, while saving and investing well enough that we can save several magnitudes more later. After all, if all the starfishes are ignored til later, they may all be dead later!
True that! :)
Smart on company matches on those donations too – I didn’t know places did that?
I currently save 25% of my income and live on 75%. My goal is to live off 50% of my income. One-third would be even more awesome!
I love the simplicity of Angelina’s breakdown, but I’m not so sure it’s possible in reality.
The cost of living in Australia (Sydney in particular) means that living on only one third of income is incredibly difficult.
I do however allocate a portion of my income straight to charity through workplace giving, but unfortunately no where near one third. Once Mrs Ikonz and I get closer to retirement and financial freedom, I can foresee our expenditure looking a lot more like Angelina’s version.
If I had Jolie’s income I’d certainly give a third away! On the average Americans’ income, though, giving away a third sounds like a bit much! I’d be broke! :)
This is why you try not to be average ;) In both income and expenses!
Allocating money for charity donation is very hard for the average person. While it is a great gesture it should not be heavily promoted if it will cause stress on one’s financial situation. Save money when you are young and give back when you are older is my philosophy. Unfortunately in the world we currently live in it makes more sense to invest in yourself before others.
With that said! This does not mean you shouldn’t give back to people! Money is not the only way to give back so make sure to participate in building homes and other sponsored activities that can significantly benefit those in need.
Yes – definitely important to make sure you’re financially sound before doing something drastic. So much more good/help can come from that into the future for sure!
Good and simple budget if you can pull it off. I cant stop staring at the GIF, thanks man. Anyways stick to the best plan that works for you and just tweak it with time, is the best advice. Good luck.
It’s as if she’s looking through our souls as she kisses us!
This is a great article. The key is to start saving. I am a fan of the Richest Man in Babylon where it says, “Pay Yourself First”. Paying oneself first is the key. So much money flows through our hands in a lifetime. Why not keep some of it? We always seem to have enough for every and any bill that pops out every month. Yet many people never have enough money to put some aside. Pay yourself first. :-)
And so true about somehow always finding money to pay bills…. reminds me of being back in college when I broke broke yet always had enough to buy beer :)
What a juicy little tid-bit! I do wish you had been able to find more but even this little quote is great. I love to hear that there are some celebrities out there that “budget”, save and also give back. It always amazes me to hear stories about superstars or pro athletes that are broke once the multi-million dollar salary dries up. So glad that she seems to (from what we can tell) have things figured out. Thanks for sharing.
This is a fantastic strategy! I’ve heard people discuss this before (and I actually heard of one guy who spent 1/3 of his income on books!).
I believe the biggest value in this is keeping yourself humble as your wealth grows. It’s crazy how someone making $1 M a year could spend it all on themselves, but it happens all too often. By saving substantially, and giving substantially, I definitely think we can make the future a far better place for both ourselves and others.
And thanks for sharing the starfish story. Classic.
I’m getting close to 40% saving/investing. I’d love to get to 50%, but happy with what I’m doing on a very average salary. Good post, thanks!
Hell yeah man, 40-50% is killer! Be proud of that!
If I were going to compare myself with Ms. Jolie currently, I would use gross pay and considered my taxes as giving, since they go fund Government services, albeit a large portion to military spending (still creates jobs/demand for goods and services). For me it would be 50% savings, 25% taxes/giving, and 25% living.
Haha… haven’t heard that spin on taxes before
For someone who was portrayed in the media early in her career as being crazy, Angelina Jolie sure is one badass woman. I am trying this year to start investing beyond just my retirement accounts. That will be the next step I think for me.
Are people using gross income or net income when using these %-based strategies? I always wonder how that works since since a big chunk of ours comes out pre-tax for 401k, HSA and giving.
I think everyone does it differently :) Some merge it when it comes to saving/investing (for exactly the reasons you mention above), while others do after-tax. Like when saying they put X% of their paycheck towards their house or car or groceries, etc. No real hard answers out there so really just a matter of picking a style to track yourself and then keeping it consistent from there. That way you can track progress using a baseline!
I prefer to go off of my after tax income. For 2017 I’m looking at 45% retirement/after-tax investing, 22% housing, 6% travel, 6% transportation (vehicle loan, insurance & gas), 6% food, 4% pet expenses, 3% Emergency Medical savings, 4% utilities (cellphone, gas, electricity), 1% entertainment (Hulu, Netflix, etc.). That leaves 3% left over for whatever
Beautiful! That’s a 50% savings rate right there!
Hey J, You have some knack to have hunted out even Angelina Jolie’s budgeting strategy. Guess now it’s clear how she is one of the celebrities who really is synonymous with charity.
Some people might think it’s easy to have this kind of a budget allocation at that income level, but the more you earn, higher the temptation to slip into extrinsically motivated materialistic tendencies of keeping up appearances. It takes an effort to stick to a budget, irrespective of your income level.