Ramit Sethi

Most of us do not know our basic numbers.

Money is so mystifying and confusing, often by design, but also by a lack of effort that we put into it, that when I ask people, what's your household income?

You know, 50% of people do not even know their own household income.

What people typically discover when they calculate their four key numbers is that they have way too much money going towards fixed costs.

That would be things like their housing, which is a huge problem, especially now, towards their cars.

Americans love to buy gargantuan $85,000 trucks and then...

you know, they go, oh, that's just normal.

They also discover that they don't have a lot in savings.

And when we look at how much they're automatically saving every month, it's usually zero.

What a blessing to be able to go, oh, it's very clear why we don't have any savings because we are not saving.

Now that we understand the basics, we can make some changes.

The first is your fixed costs.

Anything that is fixed to keep the lights on.

So your rent or mortgage, your auto payments, debt, groceries, the things that you use every day and they're going to stay there.

The next one is your savings.

How much are you saving?

These are as a percentage of your take-home pay.

The third is your investments.

That's where the real wealth is created.

And finally is guilt-free spending.