Mastering Your Finances: Key Rules of Thumb

💰Keep your housing and housing-related expenses below 30% of your gross income to free up funds for other expenses and savings.

🏦Limit your total debt payments to less than 36% of your gross income to create breathing room in your budget.

💵Aim to save 20% of your income, with 15% going towards long-term goals and 5% for short-term goals.

🚨Build an emergency fund of 3 to 6 months' worth of essential expenses to cover unexpected financial setbacks.

📈Use the rule of 72 to estimate how long it will take for your investments to double based on your expected rate of return.

What percentage of my income should I spend on housing?

—Your housing and housing-related expenses should ideally be 30% or less of your gross income.

How much debt is too much?

—Keep your total debt payments below 36% of your gross income to avoid being burdened by excessive debt.

What percentage of my income should I save?

—Aim to save 20% of your income, with 15% going towards long-term goals and 5% for short-term goals.

Why is an emergency fund important?

—An emergency fund provides a financial safety net in case of unexpected expenses or a loss of income.

How can I predict the growth of my investments?

—Use the rule of 72 to estimate how long it will take for your investments to double based on your expected rate of return.

00:00Introduction: In this video, we'll explore key rules of thumb for mastering your finances.

00:58Housing Expenses: Keep your housing and related expenses below 30% of your income to free up funds for other expenses and savings.

03:28Total Debt: Limit your total debt payments to less than 36% of your income to create breathing room in your budget.

05:25Savings Goals: Aim to save 20% of your income, with 15% going towards long-term goals and 5% for short-term goals.

06:36Emergency Fund: Build an emergency fund of 3 to 6 months' worth of essential expenses to cover unexpected financial setbacks.

07:40Investment Growth: Use the rule of 72 to estimate how long it will take for your investments to double based on your expected rate of return.