How to Manage Money Like a Millionaire: 15 Proven Strategies

Q: How do you do the 50-20-30 budget rule?

The 50-20-30 money rule is a money management tool to help you allocate your after-tax income in the following 3 categories: Needs, wants and savings. 50% should be spent on necessary expenses 20% should be allocated toward savings 30% should be spent on any “wants” The 50-20-30 budget rule is simply a rule of thumb – and I would argue that the 20% of savings should include retirement investments – not just a savings account.

by Fiona Smith
Updated April 4, 2024

Disclosure: This post may receive compensation from partners listed through affiliate partnerships, at no cost to you. This doesn’t influence our ratings, and the opinions are our own. Learn more here.

There are many money management guides out there, but here’s what makes this one different…

In my 7+ year corporate wealth management career, I’ve worked with:

Decamillionaires
Self-made millionaires
Ultra-high net worth millionaires ($100m+)
7-figure earners (who were just entering their 40s)

And in this post, I’m going to show you the strategies these wealthy individuals use to manage money.

Let’s dive right in.

The Importance of Money Management

When you talk about your financial situation, how do you feel?

Upset
Scared
Anxious
Nervous

Or, you may simply not even want to talk about your financial situation – following the motto “ignorance is bliss.”

If you feel heart palpitations even thinking about your financial situation – then you are not alone.

Source: Career Builder

Managing your money can be a tough job.

And it’s probably not fun to think about – especially if you fall into that 78% category of people who are living paycheck to paycheck.

Source: Federal Reserve

Imagine if one of the following situations happens to you:

A flat tire
A vet expense
A hospital emergency

Could you afford these unforeseen expenses without flinching?

Source: CBNC

There really is no wonder that much of our daily stress comes from money – especially after reading these statistics.

It’s time to take back control over your financial life – whether you earn $30,000 or $300,000.

The simple rule in life is this: You can’t become wealthy without a plan.

"Control your money before it controls you."

Tweet

When you create a plan, dealing with financial matters won’t be stressful – believe me.

It’s your life and your money, so make sure you take the time, read through this post and apply the strategies I suggest here to make your life better.

15 Ways to Manage Your Money Like a Millionaire

I want to caution you that the hardest part of managing your money like a millionaire is not starting.

It’s continuing the course.

If you want to become a millionaire, then you need to remember that it takes:

Time
Patience
Confidence
Consistency

You won’t see success overnight.

But you will see success in the future if you stay committed and consistently follow my 15-step guide.

Let’s get started.

1. Create a Financial Inventory

The first step to managing your money like a millionaire – is to figure out how much money you have.

This could probably be the scariest part of the entire process because this is where you figure out if you:

Have a $0 net worth
Have a positive net worth
Have a negative net worth

Net Worth Defined: A net worth is a snapshot of your financial position at a specific period in time. This could be a negative net worth, a $0 net worth, or a positive net worth.

I’ve detailed a few things below:

Net Worth	What it Means
Negative Net Worth	You owe more than you own
$0 Net Worth	You don’t owe anything – but you don’t own anything either
Positive Net Worth	You own more than you owe

To figure out where you currently stand, I’d suggest downloading the free net worth tracker offered by Personal Capital.

This net worth tracker is free, it’s super easy to use and it incorporates a few other free financial tools offered – including the savings planner and retirement planner tools.

Pro Tip: If you’re creating your net worth statement for the first time, it’s so important to be brutally honest with yourself. This is not the time to sugarcoat things.

Your net worth statement will be the foundation we need to build the path toward financial independence.

The most important thing here is to write down your current financial situation – don’t just let it sit in your head (where numbers can become skewed).

2. Develop Your Financial Blueprint

You can’t expect to manage your money like a millionaire if you don’t have a plan.

If you don’t have a plan, you could:

Fall victim to old habits
Fail to follow healthy habits
Lose sight of your financial vision

If you find yourself to be the person who easily forgets or tends to slack off on things (be honest with yourself here), then you 100% need a budget.

That’s right. I said the “b word.”

It’s very simple to create a budget for yourself – and I find it fun because it’s like I’m the CFO of my own household expenses.

Some things to remember when creating a budget:

Take note of your basic living expenses
Take note of any unnecessary expenses
Make a true effort to stop spending on unnecessary costs

Pro Tip: If you are new to budgeting, I would highly suggest to track every cent (I’m serious) of your expenses for the last 2 to 3 months. Get an idea of how much you are spending over a period of time.

If you’re ready to step-up and manage money like a millionaire, I’d suggest starting a budget using You Need a Budget 👇

YNAB

On average, new budgeters save $600 in their first two months and more than $6,000 their first year. Click here to try YNAB free for 34 days.

Learn more

Here’s some info about YNAB:

Easy to sync outside accounts
Can directly import bank transactions
Customized budgeting recommendations
YNAB website offers excellent financial advice

The downside to YNAB is that it costs a small chunk of money: $11.99 per month.

But, I would argue that if you want to make a difference, then this app is certainly worth the cost.

Related: YNAB Review

Remember this: Be brutally honest with yourself, or this process will be in vain.

3. Understand Your “Why”

I think this step – understanding your “why” – is extremely underrated when it comes to managing money like a millionaire.

Here’s my question for you: How can you go through your financial life without knowing why you are saving and investing?

Below are my why’s:

My family
Building a life I love
Leaving a lasting legacy
Creating lasting memories

My ultimate “why” is my family.

I know that my family is the reason why I am where I am now.

It’s time I repay them the favor and build a lasting legacy – that’s why I am not going to allow myself to fall into debt again or spend more than I earn.

Pro Tip: When you know your “why” and the reason behind why you are saving, investing, paying off debt, etc. it will be 1,000 times easier to keep going instead of giving up.

On the contrary, if you’re just saving to save and just investing to invest – without a real purpose – then giving up will be much easier… and possibly permanent.

4. Build Your Emergency Savings Fund

If COVID has taught you one thing – it should be keeping an emergency savings fund.

"An emergency savings fund can make or break your financial future."

Tweet

Typically speaking, you’d want your emergency savings fund to encompass the following:

Cash
Readily accessible
3 to 6 months’ worth of living expenses

And – just like the name says – an emergency savings fund should be used ONLY for emergencies, which could include:

A flat tire
A leaky roof
A health emergency

The goal should be this: For starters, try saving $1,000 in your emergency savings fund.

If you feel like saving 3 to 6 months’ worth of living expenses is too complicated at this point, given your income, then it might make sense to simply aim for $1,000 of emergency savings.

Pro Tip: Sometimes it’s best to physically separate your emergency savings fund account from your regular checking and/or savings account. It would make sense to keep your emergency savings fund in a high-yield savings account to earn a little extra money.

Let’s say you’re stashing about $1,000 in your high-yield emergency savings fund.

Check out how much money you can earn – without moving a finger – on a high-yield savings account.

High-Yield Savings Account
Initial Investment	$10,000
Investment Time Frame	30 Years
Interest Rate	0.60%
Ending Portfolio Value	$11,966
Profit	$1,966

Given the current interest rate environment (early to mid-February 2022), a good high yield rate would be around 0.61%, which is exactly what Axos Bank is offering 👇

Axos Bank

Grow your savings faster with interest compounded daily. No monthly maintenance fees. No minimum balance requirements. Plus a free ATM card upon request.

Learn more

Member FDIC

Axos Bank would be my Number 1 recommendation for a high-yield savings account.

Check out some of the Axos Bank features:

Free ATM cards
$0 maintenance fees
Competitive APY rates
No monthly minimum required balances
$250 minimum balance to open an account

And the best part is that opening an account with Axos Bank is free… there’s my favorite word again!

5. Open Investment Accounts

If your ultimate goal is to build and maintain wealth well into your retirement, it is very important to understand the importance – and power – of investing.

Investing, thanks to compound interest and dollar cost averaging, is how you can help your money grow over decades.

The point is not how much money you earn currently – I don’t care if you are earning $30,000 or $300,000 per year – to build long-term wealth, you have to start.

You can start investing with:

$5 a day
$10 a week
$500 a month

It doesn’t matter how much you use to begin your investing journey – what matters is that you start and continue investing.

Don’t ever stop investing (or withdraw your invested money, which would defeat the purpose of this step).

If you’re a beginner investor and don’t necessarily have $100s to invest – yet – then Acorns may make the most sense for your situation 👇

Acorns

Invest spare change, bank smarter, save for retirement and more.

Learn more

Below are some Acorns fast facts:

Acorns
Minimum to Open Account	$0
Minimum Investment	$5
Fractional Shares?	Yes
Fees	$1 per month for the Lite plan
Accounts	- Traditional IRA - Checking account

If you’re a serious investor and intend to invest $100’s of dollars over a certain period of time, then it might make sense to consider opening an account with M1 Finance 👇

M1 Finance

Invest, borrow, and spend, all in one easy-to-use app. No speculative day trading, just long-term wealth building.

Learn more

M1 Finance is an investment app for the investor who is looking to grow their investments substantially.

Check out some M1 fast facts:

M1 Finance
Minimum to Open Account	$0
Minimum Investment	$100
Fractional Shares?	Yes
Fees	$0
Accounts	- Joint - Trusts - SEP IRA - Roth IRA - Rollover IRA - Traditional IRA - Individual Account

In the end, what matters is simply starting the investing journey.

Although investing $5 per day may not sound like much, in 4 decades from now, you’ll be thankful; you started when you did.

6. Review Your Spending

There is no way you can manage money like a millionaire without tracking your progress and reviewing where you currently are.

One of the key traits to success is creating and more importantly reviewing your long-term goals consistently.

Source: ESI Money

When was the last time you checked in, on your progress?

If the answer is more than 24 hours ago, it’s time to review your current financial situation – especially how much you have been spending.

Of course, a budget is going to be the easiest way to help you monitor your spending habits

If you haven’t created a budget yet, then I’d suggest checking out the customized budgeting app YNAB.

As you review your daily spending habits, it’s important to keep in mind the following:

Your needs (basic living expenses)
Your wants (eating out, clothing shopping, etc.)
Your wishes (things or experiences you’d like to buy, like vacations)

Anything that is not considered a “need” or a basic living expense (such as health care insurance costs, rent/mortgage, groceries, utilities, etc.), I would cut out of my budget.

There is a lot of money to be saved on monthly, recurring expenses as well:

TV bills
Wifi bills
Cellphone bills
Satellite radio bills

There are services available to you, such as Truebill, that reach out on your behalf to these servicing companies and negotiate lower prices for you.

7. Review Your Income

It’s always a good idea to review your income – especially if you are a freelancer or own your own business.

I feel like I have a running tally in my mind of how much money earn each day or week, but sometimes that number can be vastly skewed.

You can review your income either through a budgeting app or you can track your own income – for free – using an excel spreadsheet.

Yes, reviewing your income and expenses daily may be tiresome.

However, monitoring your finances doesn’t have to take hours on end.

In fact, if you have your budget under control, it could take you a few minutes to determine whether your finances are on track.

8. Increase Your Income

You can boost your income in several ways.

For example, by living frugally or investing in income generating assets.

In this scenario, we are going to consider how you can increase your income.

Some options could include:

Start increasing your income today.

Your future self will thank you.

9. Pay off High-Interest Debt

So many people suffer from debt today.

Source: Dave Ramsey

Debt can virtually rob you of your future self.

Debt can take away your dreams of:

Retirement
Living stress-free
Saving for the future
Leaving a legacy for your family

In fact, debt can have people feel trapped and force people to change their life goals.

For example, debt may be a factor why people can’t:

Start families
Afford homes
Take vacations

And what’s even sadder is that most college graduates start their adult lives in over $30,000 of student debt.

So to help you save for retirement and build a better tomorrow, it’s essential to pay off high-interest debt.

Recommended Reading: How to Get Out of Debt Fast

10. Review Your Credit Score

Reviewing your credit score is imperative to understanding your current situation versus where you want to be in the future.

Your credit score is a 3-digit number that could make or break your financial future – especially as it relates to interest rates or whether you are approved for loans.

Below is a rule of thumb:

Credit Score Rule of Thumb
The higher your credit score	The lower your interest rate

And if your interest rate is lower, that means you save more money.

TransUnion is a credit monitoring apps that could help you better understand your financial situation and improve it.

TransUnion

Transunion offers total credit protection all in one place from credit score, credit report, and credit alert. Check your credit score today from TransUnion!

Learn more

With TransUnion, you could either apply for your free annual credit reports or you could sign up for regular credit monitoring services, which will typically cost you around $24.95 per month.

TransUnion would:

Send you email updates with changes to your report
Offer personalized help based on your financial situation
Provide customized strategies to help you boost your credit score
Give you access to a credit score simulator to see how future events can impact your credit score

The great thing is that your credit score is not permanent.

You can always boost your credit score if you follow some strategies, such as paying your bills on time, becoming an authorized user, and more.

Recommended Reading: How to Raise Your Credit Score

11. Prepare a Sinking Fund

One of my go-to strategies for managing money is to prepare a sinking fund for anticipated, major future expenses.

Sinking Fund Defined: A sinking fund is a strategic money management technique where you periodically set aside money in a separate savings account to pay for an anticipated future expenses.

For example, if you know you’ll have to pay for:

A new car
A new roof
College costs
Life insurance bills

…Then it might be a good idea to set aside a small portion of your paycheck in a separate, high-yield savings account (to maximize your money) to pay for these future, anticipated expenses.

The worst thing that can happen is this:

You know you have to pay for future expenses, you fail to save for them, and then you’re left scrambling to find the cash to pay for these expenses. Ouch.

To avoid the scenario, I’d suggest doing this:

Open your sinking fund using a high-yield savings account
Set aside a portion of your paycheck toward a sinking fund
Regularly move money into your sinking fund

Axos Bank offers competitive high-interest rates, given the market conditions, which could help you earn a little bit of extra money on your stashed sinking fund cash.

12. Save for Retirement

Although it might seem like retirement is far away, it’s really important to start saving and investing for your retirement, beginning today.

Why is it important you start saving and investing for your retirement today?

That’s because of the power of compound interest.

Compound Interest Defined: Compound interest is when your money earns you more money. In other words, your original contribution (the principal) earns interest and the interest earns interest.

Although you may not see a major impact on your investments in year 1 – or even year 9 – you will start seeing your total investment balance increase over the decades, if you continue to:

Invest consistently
Don’t withdraw money
Don’t allow emotions to control your investments

Keep in mind that there are many different types of investment and retirement accounts out there to manage money like the pros.

Some of those plans include:

401(k)s
Roth IRAs
Joint accounts
Traditional IRAs
Individual accounts

If you do not have access to employer-sponsored retirement plans, like 401(k)s, 403(b)s or 457(b)s, for instance, then you can always open your own investment account, like with Rocket Dollar 👇

Rocket Dollar

With a Rocket Dollar account, you are free to invest your retirement savings in the assets you want.

Learn more

With RocketDollar, you can establish your own 401k (aka Solo 401k) and make contributions to that 401k just as you would a regular, employer-sponsored 401k plan.

Pro Tip: Although most suggest to save and invest around 10% to 15% of annual gross income for retirement, I typically recommend to save and invest between 20% to 30% of your gross annual income for retirement.

In my eyes, the more you save today (even if you’re not earning 6-figures), the better your retirement will look tomorrow.

And if you are just not able to save 20% of your gross annual income this year – that’s perfectly OK.

My suggestion is to simply start somewhere and increase your savings/investing rate by 1% per year.

A gradual increase in your savings/investing rate will help you reach your ultimate goal, just possibly a little longer.

The most important takeaway here is to simply start.

13. Purchase Cost-Efficient Life Insurance

Life insurance can be expensive – and necessary.

If you haven’t taken the time to review your life insurance situation and you are currently in similar situations like below:

You have or plan to have a family
You have a spouse who earns less than you
You have someone who is depending on your income

…Then it certainly is time to consider purchasing life insurance.

My favorite life insurance – especially for young professionals – is term life insurance.

Term Life Insurance Defined: Term life insurance is the cheapest and simplest form of life insurance. Term life insurance can cover you for a specific term, typically between 10 to 30 years, after which your term expires and your insurance coverage evaporates.

However, if you’re a young professional and are considering forming a family in the future then I highly recommend for you to choose term life insurance.

You could obtain term life coverage of $1,000,000, for example, which may only cost you around $60 per month depending on your health status and several other factors.

My go-to term life insurance marketplace is Policygenius 👇

Policygenius

Need help deciding between insurers? Policygenius makes it easy to compare quotes and companies in one place. You can save up to 40% by using Policygenius to compare life insurance quotes from top companies.

Learn more

Policygenius is a marketplace – which means that they don’t just represent 1 life insurance company.

Instead, when you request a quote from Policygenius, you can receive quotes from several different – and high-quality – life insurance companies, including (but not limited to) Lincoln, Prudential, Principal, etc.

Recommended Reading: How Much Life Insurance Do I Need?

14. Learn As Much As You Can

Knowledge is power – in any aspect of life.

So, the more you understand how to:

Save money
Invest money
Build a network

…The better your future chances of success will be.

The more I learn about personal finance – and trust me, the learning process never stops – the better I can evaluate my current financial situation and make adjustments as needed.

With this statistic in mind, I would suggest that to manage money like the pros, you also have to keep educating yourself like the pros.

This means:

Read books
Listen to podcasts
Learn from mentors
Take online courses

Udemy is an excellent resource to learn the things you wished you were taught in the classroom from leaders around the world 👇

Udemy

Learn anything, on your schedule

Learn more

Udemy is an online platform that offers the following:

65 languages
183,000 courses
70,000 instructors
40 million students

Learn as much as you can, every single day, to help you master your personal financial situation.

The more you learn from others – both from their successes and their failures – the more time, energy and money you can potentially save.

15. Start Today

To manage money like a pro, you don’t need to be overwhelmed.

In fact, when you do the heavy lifting:

Reviewing your budget
Reviewing your net worth
Automating your investments
Setting up an emergency savings fund

The rest is actually pretty easy.

It’s just so important to monitor your finances regularly – and never lose sight of your financial goals, be it to pay off debt or to build a nest egg to retire early, etc.

Once you master the art of managing your money like a millionaire, you’ll be able to:

Pay off debt
Save for retirement
Leave a lasting family legacy
Free up time to do the things you want to do

But none of that will happen if you don’t start – and don’t consistently monitor your efforts.

Make sure to begin and implement your plan today.

How to Manage Money FAQs

How do you do the 50-20-30 budget rule?

The 50-20-30 money rule is a money management tool to help you allocate your after-tax income in the following 3 categories: Needs, wants and savings.

50% should be spent on necessary expenses
20% should be allocated toward savings
30% should be spent on any “wants”

The 50-20-30 budget rule is simply a rule of thumb – and I would argue that the 20% of savings should include retirement investments – not just a savings account.

How do you balance your money?

There are several steps you can take to balance your money – and take back control of your financial future:

Budget
Pay off your debt
Analyze your income
Analyze your expenses
Cut out unnecessary expenses
Save 20% to 30% for retirement
Build an emergency savings fund

The hardest part is doing these things every day, every week, every year.

Without consistently monitoring your financial situation, chances are, you’ll likely fall short of your future financial goals.

What are the 3 basic steps to better money management?

You can take 3 basic steps to improve your money management:

Budget
Start saving
Pay off your debt

If you readily commit to these 3 money management goals, you will be taking back control of your money in no time.

How can I improve my money management skills?

There are several steps you can begin to take to improve your money management skills.

Below is a list of 5 steps that you can take today:

Pay yourself
Pay off your debt
Build an emergency savings fund
Cut out spending on unnecessary items
Increase your income by building a side hustle
Organize your financial picture by using a budget

The most important step is simply to start.

Money Management: The Bottom Line

With a simple plan of action, you have the power to turn around your financial situation for the better.

Your financial picture is only as difficult and stressful as you make it.

If you decide to look the other way, and neglect your finances, you may be in for a rude awakening.

Instead, take some time – 30 minutes every week for example – to sit down and review your financial status.

Those 30 minutes you spend reviewing your:

Budget
Income
Savings
Spending
Investing

…Could save you $1,000s and a lot of time.

Now that you read through this post, gathered some actionable ideas on how to manage money, it’s actually time to start.

"Starting can be the most difficult but most important part of the process."

If you want to follow in the footsteps of the wealthy then your first steps should include implementing these suggestions above.

Anyone can manage their money with success. It’s going to take time, effort, and consistently showing up.

Your bank accounts will thank me later.

Which money management strategy are you going to try? Let me know in the comments below.

Join 30,000+ People That Get My Weekly Tips via Email

Every Saturday morning, you’ll get 1 actionable tip to help you save more money, increase your income, and multiply your wealth 👇

No spam. Just the highest quality tips on the web.

Join over 30,000+ others who receive my weekly newsletter, where I share the secrets to creating modern wealth 👇

How to Manage Money Like a Millionaire: 15 Proven Strategies

In this article

The Importance of Money Management

15 Ways to Manage Your Money Like a Millionaire

1. Create a Financial Inventory

2. Develop Your Financial Blueprint

YNAB

3. Understand Your “Why”

4. Build Your Emergency Savings Fund

Axos Bank

5. Open Investment Accounts

Acorns

M1 Finance

6. Review Your Spending

7. Review Your Income

8. Increase Your Income

9. Pay off High-Interest Debt

10. Review Your Credit Score

TransUnion

11. Prepare a Sinking Fund

12. Save for Retirement

Rocket Dollar

13. Purchase Cost-Efficient Life Insurance

Policygenius

14. Learn As Much As You Can

Udemy

15. Start Today

How to Manage Money FAQs

How do you do the 50-20-30 budget rule?

How do you balance your money?

What are the 3 basic steps to better money management?

How can I improve my money management skills?

Money Management: The Bottom Line

Unlock the Secrets to Modern Wealth