The guy profiled was tech worker for 30 years, but allegedly "not good with money." If you're in your 20's don't be that guy. Live within your means, save for those future days.
Basically, spend as little money as possible until your dead. It's surprisingly good advice.
Why would the amount you spend be framed in the context of what you're making?
You're just setting yourself up to spend more as you earn more, which is the exact opposite of what MMM is all about.
Remember, The goldfish fills the bowl.
And typically the number one thing that negatively affects a person's financial situation is the state of the national/global economy, that is, something entirely outside their immediate control. Thus having a nice cushion for something outside your control is a pretty good idea.
Watch Robert Shiller's OpenYale courses. They're amazing. Particularly the last one* in which he mentions that, to reiterate, that most financial problems most people face are economic circumstances completely outside of their control. The causes of which are financial institutions inability to properly deal with risks which then causes massive economic inequality that we see today and which is growing larger more so today than it ever has in history.
*http://www.youtube.com/watch?v=2_pDTWgJg94&index=24&list=PL8...
* Save at least 10% of your income. "At least," because you want both long-term/retirement savings, and a "rainy day" fund for unexpected expenses. * Minimize your debt. If you have lots of debt, prioritize paying it down. * If you aren't good at the first two items, create a budget, and stick to it.
Also, if you want professional advice, ask around and find a good financial adviser, particularly if you are looking for an investment strategy for long-term savings.
This is also a good general post by someone who now writes about business for Bloomberg http://www.theatlantic.com/business/archive/2011/03/10-quick...
At the big picture level though, it's mostly about living within your income and putting some money away on a regular basis. (Someone else mentioned at least 10%.) At some level, everything else is keyhole optimization assuming some sane diversification of savings--don't put it in Bitcoin or all in your company's stock. It's useful to get other things right but they're much less important in the big picture than outflow < ~.9 * inflow (after tax).
I used a simple table with columns date, account, value, purpose. "account" helps getting a sum total for each bank account and for cash, to check how my table compares with reality (ie. bank statements and the content of my wallet).
Simply by tracking money flow you already learn a lot about your habits, while collecting data that helps you optimize it if necessary. I also found that making spending a conscious matter like that already reduced impulse buys.
After that, the other ideas are good ones - and you'll know if they're achievable for you and how.
1) Housing tends to be the biggest expense. So try to share an apartment with flat mates until you're sick of it, or even stay at your parents place for a few years (if that's possible).
2) If you need a car, buy a used one in good condition and keep it that way for many years. Make sure you change the oil and filters at recommended intervals.
3) If you like to travel, learn to do it cheaply! Long and wonderful trips in south-america or asia can easily be had for 1000$-2000$ a month - sleep in hostels, eat what the locals eat, don't drive/fly around to much, travel slowly. :-)
4) Learn to cook.
5) Learn to make and fix basic things around the house: installing fixtures, plumbing, wall painting, furniture (fixing and making), etc. Doing things yourself is more satisfying and saves money.
All designed to keep my 'burn rate' low.
I'm sure others can give you more common sense advice.
This is actually not terribly good advice. Debt does not become especially bad depending on whether what you used it for is gaining or losing value.
This rule is really a proxy for, "Don't buy an expensive car, boat, or plane, relative to what you are making." Now that is a good rule. There's no reason to hide it behind a false rule. Financing a purchase that you could pay cash for can sometimes be wise, even if the purchased item is losing value.
Debt is evil. Unless you can get a higher rate of return than the interest rate of your debt, pay off the debt as soon as possible.
Have at least 6 months of expenses in an easily accessible, liquid place like a bank account. Once you've got that rainy-day fund in place, plow the rest (at least 10% of income, 20% is probably a better target) into investments and take any tax advantages possible:
Traditional IRA + Roth IRA ($5500 combined max/year)
Traditional IRA contribution is tax deductible if you aren't covered by a work retirement plan or if you're under a certain earning threshold.
Take advantage of 401(k) if your employer offers it, contribute at least enough to get any matching they offer. These are pre-tax dollars, but some plans have shitty investment options, so YMMV. $17,500 max/year.
Put the rest in an individual brokerage account and invest regularly (monthly or quarterly) in low-cost, broad-market index funds or ETFs like VTI, VOO, or QQQ.
The rest is your fun money...you're young, so make sure you're also investing in yourself by going on trips, having fun experiences, etc, just keep the future in mind and don't go TOO crazy!
esplanner.com
It's, among other things, a consumption smoothing modeler (i.e. make sure that you don't oversave or overspend). It will tell you about how much you need to be saving each year, given a bunch of variables like how much you make, how much you plan to make, etc.
If you are not crushed by debt, just try to make your spendings increase much slower than your pay.