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Former Goldman Sachs CEO Lloyd Blankfein advised young workers with extra cash saved up to spend it on something practical — and something fun.

Blankfein spoke on a recent episode of the podcast, responding to a question about his advice for a 25-year-old with $5,000 in savings. His first instinct is to treat $5,000 as a foundation against worst-case scenarios. 

“Well, the first thing I did was I bought an insurance policy,” he said. “The first purchase I made.” He says he bought life insurance as a “form of savings” since he built value with the insurer that he could tap if he ever really needed it. He added that if you have a young family, you “owe it to them” to think ahead and make sure they are protected. 

After that practical investment, Blankfein suggested buying a car for fun. “Obviously, you want to have some fun in your life, so you could buy that 14-year-old used car, I’ll give you that,” he told the podcast. 

Blankfein’s investing tips

Only after insurance and essential transportation are taken care of does investing enter the picture in Blankfein’s framework. He advised young savers to invest in stocks and other riskier investments, since they are likely to grow faster than safer bets like bonds. 

To keep more of those gains, he also said young investors should steer clear of high fees by choosing low-cost investment funds instead. 

Blankfein served as CEO and chairman of Goldman Sachs from , steering the firm through the 2008 financial crisis. He is now the of the company. 

He said on the podcast that he keeps his extra money in Goldman’s Marcus savings account, a high-yield, online-only account with low overheads. Marcus, he says, “doesn’t have branch offices and doesn’t have to pay for a lot of people, no pens to give out. No TVs or toasters.”

He also buys and sells stocks, telling the podcast jokingly that “when they bury me, they’d better put in a market screen and extra batteries.”

Blankfein’s leadership style

Also on the podcast, Blankfein elaborated on his management style. As a former Goldman Sachs CEO, Blankfein treated his staff as owners of the company in a partnership instead of as mere employees. The difference, he explained, was that in a normal corporate environment, employees did their jobs with little curiosity about what happened throughout the company. In contrast, in a partnership, the people who work in a company care about the whole firm. 

“They behave like owners, and they feel entitled to know what goes on, and they feel accountable for the whole firm,” he told the podcast. “It’s a very different organization, but you get a very different outcome.”

The partnership structure can slow down decision-making because it involves more voices in the process. However, Blankfein said that “it’s a better decision-making process” overall, enriched by more perspectives.