Read Time: 4-minutes
Happy Saturday,
If your finances aren’t in the best of shape, there’s a good chance part of the problem is the way they feel.
Which is probably be because traditional financial advice recommends tracking every expense to the penny. To be fair, there is a time and place for precision. But, initially, it can feel tedious, complicated, & even overwhelming.
You then put it off, procrastinating, and let poor habits compound. Your credit card debt grows while your anxiety rises.
There’s a better way.
When you’re just getting started, there’s more value in building momentum rather than precision (you can get more precise later).
By focusing on the simple, big levers that bring the most value, you start making sustainable progress, the theme of this week’s 6-Point Saturday.
Table of Contents*
*Clickable in the online version.
Point #1 — Short Story: How Apple Transformed
"After Steve Jobs was fired from Apple in 1985, the new leadership’s general assumption was that more products across more industries would generate more profits. Actually, it sent Apple into a financial free fall.
Close to bankruptcy, after a $708 million loss in the first quarter of 1997 alone, Steve Jobs was rehired as the CEO.
During one of his first staff meetings, he walked up to a whiteboard. Apple had 40 products on the market. More important than deciding what to do is deciding what not to do, Jobs said. ‘That’s true for companies, and it’s true for products.’
He then drew a 2 x 2 grid. On top, he wrote ‘Consumer’ and ‘Professional.’ Down the side, ‘Portable’ and ‘Desktop.’ Four products—meet Apple’s new radically focused product line, Jobs said.”
After Jobs returned, he and his team—focused on making fewer products in fewer markets—transformed a dying, near-bankrupt company into one of the most valuable companies in the world, worth over $2.9 trillion.”
Pretty inspiring. Instead of spreading Apple’s efforts into dozens of products, Jobs simplified the strategy to 4 broad categories. And focused on products that brought the most value.
A great principle for many areas of our finances:
Spending Visibility: When you’re first trying to get visibility into your spending, back-of-napkin, broad categorical spending gets you 80% of the way there (More on this in Point #2).
Reducing Spend: When finding areas to reduce your spend, don’t focus on the small things that may not add up (coffee, appetizers). Look for the big items that don’t bring you as much value anymore.
Investing Strategy: Instead of getting into complicated investing strategies or products, focus on the fundamental principles that move the needle: starting ASAP, lowering costs (fees & taxes), & diversifying.
Money Mindset: One of the biggest levers you can pull is acknowledging the influence of your money mindset. Shifting from a fixed to a growth mindset (e.g., “I can get better at money.”) and viewing money as a neutral tool (instead of inherently ‘bad,’ for example) can significantly improve your financial outcomes.
Focused, leveraged effort. That’s how you build momentum.
Point #2 — The ‘Big 4’ Spending Categories
Here’s your “2×2 Grid” for money.
When you’re first getting your finances in order, instead of worrying about dozens of line items, manage 4 broad categories: Fixed Costs, Saving, Investing, & Regret-Free Spending. A breakdown on each:
Fixed Costs (50% of take-home pay): Rent/mortgage, utilities, insurance, debt payments, etc. Your Fixed Costs are your ongoing, necessary expenses.
Saving (5-10%): Saving includes your Stability Fund (Emergency Fund) and short-term goals like a vacation, wedding, or down payment.
Investing (15%-20%): Long-term wealth building. Retirement accounts & taxable investments. Money working for your future financial independence.
Flexible, Regret-Free Spending (20-30%): Dining out, hobbies, travel—everything else you enjoy.
That’s it. Four big categories. You can adjust the percentages as your income and priorities evolve, but this gets you moving today.
Point #3 — “How much should I budget for nonessentials?”
“How much should I realistically budget for ‘luxury i.e. non-essential’ expenses (30 years old) as someone who isn't sure what is a reasonable splurge?
I'm unsure how much of my income I should allocate to fun but ‘luxury’ expenses. I'm starting to move towards the enjoy life but still have enough for retirement (i.e. moderate risk) philosophy. I've grown up quite frugal so I get guilty when I do end up spending.
I mostly recently got out of ‘COVID saving’ around June 2024…My COVID saving was essentially - I spent almost nothing. Didn't buy anything (clothes, technology, laptops), primarily just ordered groceries… I was saving a significant amount of money and I think the reason I felt as though I just wasted a bunch of money this year is because I got used to how much I saved in COVID.
The past year or so, I've kind of let loose with my spending - vacations, eating out, personal hobbies, etc. I made an active choice to rarely check my monthly spending just to see what my natural spending would be. By the end of this year... I felt absolutely disgusted with myself. I really enjoyed my year but I felt anxious that I was going to fall into lifestyle creep if I didn't do a mental reset on spending.
My rough breakdown ended up being something like this:
Income:
Annual Net (post health insurance, company retirement deductions and taxes): $95,000
Expenses (approximate):
$25,000 for rent + utilities + car + internet, etc (monthly recurring charges) (~$2,100 a month)
$8,000 on groceries (~$750 a month)
$12,000 on eating out (~$1,000 a month)
$3,000 on personal hobbies/lessons/subscriptions/shopping (~$250 a month)
$12,000 on vacations (~$1,000 a month)
Transfers:
$25,000 to a brokerage
$7,000 to a Roth IRA
Debt: none/paid off
Assets: about $275k in brokerage + retirement + emergency savings. The breakdown is roughly ~$40k roth, ~$85k 401k, ~$150,000 brokerage. I do plan on making a down payment in the future (perhaps with my partner if we marry) on a house but currently I see myself moving out of state after the job market is better. That house timeframe may be 3-5 years. I would need to change my spending habits then as I currently rent a studio in a medium-high [cost-of-living] location.
I understand it's difficult to allocate budgets to people/help them prioritize non-essential spending when it depends on their personal needs. My personal self-reflection is vacations/food are things I enjoy the most. I do want to caveat that a significant part of eating out/vacations expenses are paying for my significant other given our income difference (I'd say ~$7,000-$8,000 total). In addition eating out expenses are high due to the time spent on vacations…
So the actual question is - did I spend too much? Is my current spending trajectory too risky? Or is this actually reasonable for my income and I've been a bit too frugal prior to this spending this year (ie saving ~50% of net income).
A lot to unpack—Let’s simplify the numbers into the “Big 4” framework:
Fixed Costs: $2,850/month, or 36% of take-home. No debt. That's well under the 50% target.
Savings: $0/month. But with what looks to be a solid Stability Fund in the brokerage account, $0 here is fine.
Investments: Between the Roth IRA and brokerage account, this person invests over 30% of their income. Way above the 15-20% guideline.
Flexible Spending: $2,250/month, or 28% of take-home. Right in the middle of the 20-30% range.
By many objective measures, this person is doing great. They're on track for a comfortable retirement. Their Fixed Costs are low, which creates room for both aggressive investing and enjoying life today.
But you can almost feel the anxiety throughout the post. The guilt. The fear of "lifestyle creep." The “disgust” over spending money on things they enjoyed.
There’s a disconnect between the numbers and the narrative.
Their money mindset, shaped by years of frugality, is telling them a story that the math doesn't support. They're not overspending. They're not falling behind. They're just not used to giving themselves permission to enjoy what they've earned.
This is where the Big 4 framework helps. Once you see your spending broken down into categories, you get clarity on where you stand. You can stop second-guessing every purchase and starting spending guilt-free.
Point #4 — The Case for Gold
In case you missed it, gold recently crossed $4,000 for the first time ever, up around 50% this year:
Naturally, everyone’s asking: should I buy some?
Here’s what you need to know:
What’s behind the runup?
Gold is often used to offset risks, including inflation, economic & government uncertainty, and political uncertainty.
What’s the traditional case for gold?
Unlike stocks or bonds, there’s no cash flow component (interest or dividends) with gold. It’s typically used as another way to create portfolio diversification:
Gold has shined in certain decades and underperformed in others. As far as whether to include in your allocation, it really depends on your risk tolerance and goals, among other factors. As always, this isn't personalized investment advice. Consider your specific situation or consult with a financial professional.
The bottom line: Gold can be a reasonable part of a diversified portfolio. The biggest risk with gold right now is jumping in simply because it’s gone up. Instead, consider it within the context of your overall goals, risk tolerance, and portfolio allocation.
Point #5 — Quotes of the Week
Continuing the “Leverage” theme, which of these is your favorite?
On habits ... You need to consciously arrange your time. the biggest leverage point here is picking what to work on. A good way to do this is to ruthlessly eliminate low-value tasks.
— #Shane Parrish (#@ShaneAParrish)
12:35 PM • Apr 12, 2018
It doesn’t take money to make money, it takes leverage to make money.
— #Naval (#@naval)
9:45 PM • Mar 13, 2022
The world is full of noise,
and most of it will have 0% impact on your life.Run the things that take up your thoughts & headspace through a filter.....do they even matter to your day-to-day life?
Focus on the things that are:
High impact, High outcome and High reward.— #Dr. Julie Gurner (#@drgurner)
3:35 PM • Apr 2, 2025
Point #6 — My Question of the Week
Which category of spending gives you the most “satisfaction per dollar”?
What one change in your finances would create the biggest positive impact?
Reply to let me know! I read every response.
Thanks for reading — I hope you found a helpful idea or two.
I’ll see you next Saturday with more.
Have a great weekend,
Benjamin Daniel, CFP®
Founder, Money Wisdom
P.S. Want to take control of your money, stop stressing about your expenses, & feel confident about your financial future? There are 2 ways I can help you:
Financial Health Check: Get your biggest money questions answered, understand where you stand financially, and get a personalized action plan from a CFP® professional. Book a free Intro Call here to see if you’re a good fit.
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Disclaimer:
This material is not investment or tax advice. No responsibility for loss occasioned to any person or corporate body acting or refraining to act as a result of reading this material can be accepted by the publisher.
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