How to manage your finances

Introduction: What the Rich Know That You Don’t

How to manage your finances Let me tell you something that could change your life—if you let it sink in.

According to wealth studies, the richest people in the world fall into these categories:

75% are Entrepreneurs
15% are Investors
7% inherited wealth
3% are Athletes, Artists or Celebrities
0% became wealthy from just a salary

Read that again. 0%.

So what do they all have in common?

They own something.

Entrepreneurs own businesses
Investors own assets
Rich kids own trusts
Celebrities own unique skills

If you don’t own something, you are what’s owned.

That’s the secret most people miss. And that’s exactly why I created the 25-15-50-10 Rule—a proven method to manage your money like the top 1%, no matter your income.

What Is the 25-15-50-10 Rule?

How to manage your finances

This rule is a wealth-building budget framework:

25% Growth — Money that works for you
15% Stability — Your financial safety net
50% Essentials — What keeps you functioning
10% Rewards — For enjoying life (guilt-free!)

This isn’t theory. I used this method myself—starting from nothing—to become a multimillionaire without fancy degrees or a trust fund.

Let’s break it down step by step.

25% Growth: Money That Works While You Sleep

This is your freedom fund. It’s not about spending—it’s about building wealth that works for you.

What Counts as “Growth”?

Growth means buying assets that go up in value or generate income.

Not “feel-good” spending like self-help courses or inspirational posters.

We’re talking:

Index funds (e.g., S&P 500)
Real estate (rental or REITs)
Dividend-paying stocks
High-income skills (e.g., sales, coding, copywriting)
Profitable online businesses
Crypto and alternative assets (for advanced users)

“If you don’t find a way to make money while you sleep, you’ll work until you die.” — Warren Buffett

Mind-Blowing Example: Billy vs. Phil

Billy invests $200/month starting at age 20
Phil invests $300/month starting at 30

By 60, assuming 10% returns (S&P 500 average):

Billy = $1,264,816
Phil = $678,146

Billy ends up with $600K more even though he invested less money, just because he started earlier.

That’s compound growth in action.

How to Start Investing the Smart Way

Step 1: Choose Growth Assets

Beginner: Index funds (e.g., VOO, SPY, IWDA)
Moderate: REITs, dividend stocks, side hustles
Advanced: Crypto, small-cap stocks, online business

Step 2: Use Tax-Advantaged Accounts

🇺🇸 US: Roth IRA, 401(k)
🇬🇧 UK: Stocks & Shares ISA, Pension
🇨🇦 Canada: TFSA
Others: Research your country’s retirement/investment accounts

Step 3: Automate & Forget

Set up auto-investing on payday
Use apps like Vanguard, Trading 212, SoFi, M1 Finance
Build a simple 3-fund portfolio:
- U.S. Stock Index Fund
- Global Stock Fund
- Bond Fund

Affiliate Tip: Recommend platforms like Trading 212 or M1 Finance with referral codes.

15% Stability: Protect What You’ve Built

How to manage your finances

This part keeps you in the game.

It’s your emergency fund, your buffer, your lifeline when things go wrong.

“Most people don’t have a money problem—they have a stability problem.”

Step-by-Step: Building Financial Stability

Step 1: Calculate Your Baseline Expenses

Add up:

Rent/mortgage
Utilities
Food
Transportation
Insurance

That’s your monthly survival number. Multiply it by 5.

Example: $1,500/month × 5 = $7,500 emergency fund goal

Step 2: Store It Safely

Rules:

Easy Access — Must be available in 24 hours
Zero Risk — No stock market, no crypto
Earns Interest — Use a high-yield savings account (4–5%)

Best options:

Ally Bank
SoFi
Marcus by Goldman Sachs

Step 3: Automate Saving

Paycheck Sweep — 15% of your income, direct transfer on payday
Round-Up Apps — Save spare change from purchases
Cashback to Savings — Use cashback rewards to boost your emergency fund

50% Essentials: Covering Your Needs, Not Your Ego

How to manage your finances

This is where most people blow their money.

But guess what? Wealthy people live below their means—even when they don’t have to.

“You can be broke on $100K/year if you spend like a fool.”

What Counts as “Essential”?

Needs, not wants:

Rent or mortgage
Groceries
Insurance
Utility bills
Basic transportation
Basic clothing

What’s Not Essential?

Uber Eats every night
Netflix, Disney+, and Hulu (all at once?)
Gym you don’t use
Subscriptions you forgot exist
Designer clothes

Cut the 2 Big Killers: Housing & Transport

Housing

Negotiate rent
Downsize if needed
House-hack (roommates, AirBnB, move home temporarily)

Transport

Avoid car leases
Buy used and reliable (Toyota, Honda)
Use public transport or car-sharing if possible

Use Rules, Not Willpower

Create spending filters:

Is this an impulse purchase?
Use the 7-Day Rule
Am I buying for the brand or value?
Will this improve my life long-term?

10% Rewards: Enjoy Without Guilt

How to manage your finances

This is what keeps your money plan sustainable.

“All grind and no joy makes you burn out fast.”

What to Spend It On?

Vacations (you’re buying memories, not stuff)
Hobbies (keeps you sane and motivated)
Gifts (relationships matter)
Dinners, experiences, social life

The Joy Jar System

Open a separate account (same bank or app)
Call it “Joy Jar”
Automatically send 10% of income monthly

Rule: If you run out, wait until next month—no stealing from growth or stability.

Why This System Works (Psychology + Math)

Most people fail with money not because they don’t earn enough, but because they don’t have a system.

This rule:

Ensures discipline without deprivation
Builds long-term security + short-term joy
Creates momentum toward financial independence

Whether you make $2,000 or $20,000/month, the system scales with you.

Resources to Take It Further

How to manage your finances

Books:

The Psychology of Money — Morgan Housel
Rich Dad Poor Dad — Robert Kiyosaki
I Will Teach You To Be Rich — Ramit Sethi
Your Money or Your Life — Vicki Robin

Platforms (for affiliate links):

Vanguard
M1 Finance
Trading 212
SoFi
Ally Bank

FAQ: The 25-15-50-10 Rule Explained

1. Can I use this rule if I’m on minimum wage?

Yes. Even saving small percentages consistently creates powerful habits and compound growth.

2. Should I pay off debt before investing?

Build a $1,000 emergency fund first, then prioritize high-interest debt (e.g., credit cards) before investing.

3. What’s the best growth asset for beginners?

An S&P 500 index fund (like VOO or VTSAX) is simple, diversified, and effective.

4. What if my essentials are more than 50% of my income?

Temporarily adjust, but work on cutting expenses and increasing income to hit the 50% goal.

5. Is the 25-15-50-10 rule better than 50-30-20?

Yes. It’s more strategic and aligned with building wealth—not just budgeting for survival.

6. Can I include skills under “growth”?

Absolutely. Learning high-income skills is one of the fastest ROI moves you can make.

7. Is crypto a growth asset?

Only for advanced users. Keep it to 5–10% of your growth portfolio.

8. What’s a good emergency fund size?

Aim for 3–6 months of core expenses. 5 months is the sweet spot.

9. Should I use a separate bank for each category?

Not necessary, but having separate sub-accounts or apps helps keep things organized.

10. What happens when I get a raise?

Stick to the percentages, and you’ll automatically invest and save more.

11. Is the 10% reward fund really necessary?

Yes! It helps prevent burnout and creates a positive relationship with money.

12. How do I invest globally?

Use international index funds like IWDA or VT to diversify beyond your country.

13. How do I avoid lifestyle inflation?

Lock your lifestyle at 50% and put raises into growth or stability instead of spending.

14. Should I rent or buy a home?

Depends. Renting gives flexibility. Owning builds equity. Do what aligns with your goals + stability.

15. How do I find my actual monthly baseline?

Track your expenses for 30 days using tools like Mint, YNAB, or Excel.

16. Are skills really better than stocks?

Yes—for fast cash flow and income growth. You can later invest the profits.

17. What if I have irregular income?

Base the percentages on your lowest average month to stay safe.

18. What’s the best app for investing?

Depends on your country. For the U.S., M1 Finance and Fidelity. For the UK, Trading 212.

19. How do I teach this to my kids?

Open a custodial Roth IRA, start a savings match program, and explain the 4 categories with allowance.

20. What if I’ve already made financial mistakes?

Start now. You don’t need to be perfect—just consistent and intentional.

Final Thoughts: Own Your Future

You don’t need to be rich to use this rule. But if you use it long enough, you might just become rich.

“If you don’t own something—you are something that’s owned.”

Start today.
Stay consistent.
And let your money finally work for you.

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