Mandatory Expenses: 50-60%
- Mortgage / Rent
- Groceries
- Transportation
- Insurance
- Utilities
- Charitable Contributions
Short-Term Savings: 10%
- Emergency Fund
- Down Payments
- Travel
These are savings accounts that are focused on providing a safety net for upcoming expenses.
Long-Term Investments: 10%
- Roth 401(k)
- Roth IRA
- Real Estate
These are investment accounts that are focused on providing income during your retirement.
Guilt-Free Spending: 20-30%
- FUN!!
This is money to spend however you like! Spend money on the things that you enjoy and eliminate spending on unnecessary categories that you can live without.
Home: 25-30%
- Mortgage (15 / 30 Year - Fixed Rate)
- Rent
- Taxes
- Insurance
- HOA Fees
- PMI
The average millionaire pays their mortgage off in 10.2 years.
67% of millionaires pay off their mortgage early.
91% of millionaires do not have HELOCs.
Insurance: 10-25%
- Health Insurance
- Auto Insurance
- Home Insurance
- Life Insurance (Term Life)
This will be different for everyone, the impact of the loss on a person's total wealth should affect whether they choose to insure against a risk. Remember, insurance works best to protect against financially catastrophic events that we cannot cover ourselves.
What may be catastrophic to a person just starting out may not be catastrophic to a high-net-worth individual. People with greater wealth are able to retain more risks because only extremely large risks would be catastrophic to their goals.
Savings & Investments: 10-20%
- Emergency Fund (3-6 Months of Total Expenses)
- Employer Retirement Match
- Roth IRA & Roth 401K
- Pay off Debt
- Non-Retirement Investment Accounts
75% of millionaires dollar cost average into their investments rather than lump sum investing
79% of millionaires invest inside a company sponsored plan
74% of millionaires invest outside a company sponsored plan
Transportation: 10-15%
- Car Payment (Pay off ASAP)
- Gas
- Maintenance & Repairs
- Licensing Fees
80% of millionaires pay cash for their cars
The average car purchased by a millionaire is 4 years old with 41,000 miles
Food: 10-15%
- Groceries
- Restaurants
The average millionaire couple spends less than $200 at restaurants per month
Utilities: 5-10%
- Electric
- Water
- Gas
- Sewage / Waste
- Internet
- Phone
Health & Medical: 5-10%
- HSA Account
- Prescriptions
- Medical Visits
- Medical Supplies
Entertainment: 5-10%
- TV / Streaming
- Lifestyle Purchases
- Travel
Charity: 12%
- Tithes, Firstfruits, Offerings, Alms
- Charitable Contributions
- Philanthropy