The Best One Yet - 💰 What Rihanna taught us about saving money: The 60-20-Double-10 Rule

Starting point is 00:00:00 When Grammy-winning icon Rihanna walks into the club, she gets a table. When she walks into the Armei store, she gets the bag. But in 2009, Rihanna almost walked into bankruptcy court because 80% of her money had disappeared. Financial Disturbia. There was a real estate drama, a scandal with sticky-handed accountants in one shockingly bad world tour. But then there was one saving strategy that saved Bad Girl Riri, and now she's a billionaire. It's called the 50-30-20 rule, and we tweak that rule for the post-pandemic reality of our inflation situation, because even when it's raining money, you need a savings umbrella, Ella, Ella.

Starting point is 00:00:33 Hey, hey, hey, a savings umbrella. Okay, no more singing or Rihanna's going to stop watching. Don't do that, Rihanna. Because the new secret strategy for savings is the 60-20-10 rule. This is the best chiching yet, where we reveal the money secrets are the world's most famous stars. Smash that button. Done. Better have my money?

Starting point is 00:00:51 Yes, we have your money. Stick with us for the next nine minutes. Robin Fenty of Barbados. If singer-songwriter Rihanna had a LinkedIn, page, then that's the official name that would be on it. And yes, in Barbados, it's pronounced Rihanna, not Rihanna. And back in 2009, at just 21 years old, Rihanna's LinkedIn resume was shining brighter than a diamond. Jackie, sprinkle on some context, please. For studio albums, a Grammy, and a Hot 100 number one song with Jay-Z and a world tour.

Starting point is 00:01:18 Yeah, she can legally drink for the first time, and her bank account just passed eight digits with two commas. And now, without $11 million in the bank, she's relying on the accounting team that has guided her since she launched her music career at just 16 years old. Burden LLP, that's the firm. And we're shocked. Riri hasn't written a breakup song about them. Oh, wait, Jack. She did write a disc track on those guys. More about that in a minute. Because by the end of that year, court documents show that Rihanna had lost 80% of her cash on hand,

Starting point is 00:01:44 and she blamed it all on the accountants in a lawsuit. She alleged that the accounting firm took a 22% management fee, despite being, um, accountants. Gross mismanagement is what she called it. You see, 22%, that's over double a manager's fee. And they were accountants, not managers. And she alleged that her last girl on Earth Tour was actually losing. her money. But her accountants were still getting rich on her tour. And she pointed out that she bought a

Starting point is 00:02:04 $7.5 million home in Beverly Hills that her accountants encouraged her to scoop up. But she didn't have the cash flow to cover all the costs. So by Christmas of her 21st year, Rihanna's situation was so bad, she couldn't even send wires over the holidays. And while the IRS was probably fangirling over her outside of work, the tax agency did toss an audit on her too, even though she'd been paying 22% of her revenue to an accountant to avoid exactly that. But Rihanna did find love in this hopeless place. Yes, she did. In the form of a lawsuit. She sued burden and reportedly settled for $10 million. Oh, no joke. Fans believe, bitch, better have my money. Was written about that accounting for her hit album and it was an affidavit. Really? She went on to win eight more Grammys,

Starting point is 00:02:43 launch a $1 billion Fenty Beauty brand and perform for the 2023 Super Bowl halftime show. While pregnant. Yeah. And the core reason Rihanna went from basically broke to big time billionaire, it isn't just that she broke up with that deadbeat accountant. It's also that she pivoted from splurging to saving and investing too. With a formula that you can use to. Here it comes. Now, yet it is the most emotional Rihanna song that gets us every time. It's, I want you to stay.

Starting point is 00:03:09 But we'd actually remix that song to I want you to save. And there's one classic savings rule, 50, 30, 20. Yep. If you've never heard of it, we're about to explain it. If you have heard of it, we bet you forgot to practice it. It was actually popularized back in 2005 by then professor. Yet, Senator. Elizabeth Warren.

Starting point is 00:03:24 And this budgeting breakdown tells you where to put all your after-tax income. Here it is. 50% would go into needs, 30% into wants, and 20% into savings or paying down debt. So let's say you make a $120,000 year of after-tax income, $10,000 per month, to keep it simple. $5,000 each month goes to things you can't live without. Rent or mortgage, groceries, medical bills, transportation, electricity, water, heating, and Wi-Fi. Because if you don't pay those, then you're definitely not going to see Rihanna Play Live. No, you're not. But personally, Jack, I'm going to toss gym membership in there? Totally fun. Everyone has their own definition of needs, and there is a need for legday. That's admirable.

Starting point is 00:03:55 Thank you. But after all those bills are paid, 3,000 goes to your wants. The fun stuff. Yeah, the dinner's out, the vacays, the cute tops, the brunch with the buddies, the Netflix, and the HBO subscription. Final 20% goes to your savings. And here's where things get interesting. Because we're not just talking about putting $2,000 of those paychecks each month into a literal savings account. Or paying down your student loans.

Starting point is 00:04:15 Yeah, some of that should go there. Stashed away in the SOS fund, break it in case of emergency. But that savings bucket has more layers than most song lyrics do. And we need to update them because it's 2026. Sorry, Liz Warren. we're writing your second edition. Like any good DJ, we like to remix. And that 50, 30, 20 savings plan, it's in desperate need for an update.

Starting point is 00:04:32 And here it is. 60-20-double-10. Yeah, we know we added one there and you'll see you on a second. First, why do we increase the 50 to 60% for needs? Because that's the reality of our brutal inflation situation. Rent and home prices have risen relentlessly because we don't have enough homes in this country. Home prices are up 57% since 2020, and rents are up 38%. Yeah, too bad reality.

Starting point is 00:04:52 I sold that Beverly Hills home 15 years ago. Yeah. So the reality is that the needs. portion of your budget has to increase because housing costs have increased so much more than average incomes have. So the part of your paycheck for needs, it's now 60%, not 50. For your wants, it's a sad reality, but we actually recommend shrinking that from 30% to 20%. It sucks, but higher rent comes at the expense of those raybans you've benign. But hold that frustration for a second. Because we have good news. You can make your want budget get wild again by getting creative

Starting point is 00:05:19 with that 20% savings bucket. Paying down high interest debt, that should be your priority. And having cash to cover three months of your life expenses, that's key too. Put that in a high-yield savings account. Right now we use Robin Hood, which is getting a 3.75% rate. The creativity we're talking about, though, is investing. Right. Portion of your paycheck should be playing in the markets, the greatest source of wealth generation in human history. Which leads to our second update to Rihanna's budget ratio. Split that 20% savings with 10% going to savings and debt repayment and 10% going to the markets. So $1,000 of your $10,000 monthly hypothetical paycheck, that should be directly deposited into your broker-de-recent.

Starting point is 00:05:53 account. Look, Wall Street returns, they aren't guaranteed, right, Jack? We graduated college just after the market crashed in 2008. Yeah, we did. But do not let those once in a decade dips scare you, because the most effective way to grow wealth in America for the last century has been to own a piece of the S&P 500, the 500 biggest stocks in America. And if you don't want to pick specific stocks... Although, we'll tell you how to do that in future episodes. You can simply buy the S&P 500 ETF, SPY, which is like a well-balanced smoothie of the whole stock market. We personally have huge chunks of our net worth in that S&P 500 ETF. And wow, has it grown? Yeah, it has. A thousand dollars in the S&P 500 deposited every month is $12,000 every year. Okay.

Starting point is 00:06:31 But if it grows 10% per year, which is the historical average growth, then after five years, assuming conservatively you haven't gotten a raise. But you will, you're fantastic. Those contributions are now worth $77,000. That's not savings. That's growing. And after 10 years, your $1,000 a month investment contribution has become $200 grand. That is a down payment on a very nice. And that's the beauty of the 60-20-10. By splitting your savings in half, you're still keeping money stashed away for that rainy day, but you're also letting your money grow the market mojo so that you can live out your dreams. So besties, when someone tells you,

Starting point is 00:07:03 a bitch better have my money, you may actually have more money than you realize. So, Jack, what's the takeaway for all our buddies who are fans of Riri? Saving takes planning. Yadis, how are you actually going to pull this off? Well, it doesn't happen unless you make it happen with each paycheck. And we got a bunch of ways to remember to do that, which we'll get to in future episodes of this show. Like the episode about the budget brunch? Love the budget branch. But in the meantime, Rianna climbed at a near bankruptcy by breaking up with a deadbeat accountant and doing the 50-30-20 rule. Post-pandemic, you better try our remix the 60-20 double tens. And let us know if you've got your own numerical breakdown in the comments, because one size

Starting point is 00:07:38 does not fit all. No, it doesn't. If you live with your parents, that's fantastic. Your 60% for needs can come down to 30, and you can supersize your stock market contribution and truly get rich quicker. Oh, and if you ever forget about saving money, just remember that Rihanna has literally been singing about saving money for over a decade now. Is that so next? Yeah, it's a little bit of subliminal messaging in her songs, Jack. Remember Rihanna's 2012 hit stay, we mentioned earlier? Check out the lyrics from the chorus.

Starting point is 00:08:03 Uh, funny, you're the broken one, but I'm the only one who needed saving. Because when you never see the light, it's hard to know which one of us is caving. Vesties, don't cave, save. And remember that saving takes plans. Now subscribe to this show for more money secrets of celebrities that you can use every day. Because bitch better have your money. I thought you were going to say Ella, Ella, Ella. Hey, hey, hey.

Starting point is 00:08:27 Okay, now Rihanna, you can stop. Okay.

The Best One Yet - 💰 What Rihanna taught us about saving money: The 60-20-Double-10 Rule

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