How To Manage Your Money

Mismanaging your money is the number one negative long-term effect on all aspects of your entire life in the United States today. One example is that relationships’ most common financial problems is one of the biggest reasons for breakups. The stress caused by mismanaging finance is something that’s cited consistently in health literature and even politically. 

You can see this across the board that savings, retirement, investment, personal finances, and income are constantly being debated. Whether the discussion is minimum wage, social security, or even the stock market. 

Today we are going to talk about BREAKING the money mismanagement cycle with an amazing tool that we like to call the 50/30/20 rule. 

Using this rule is essentially a cheat code for managing your expenses and managing your income, and providing yourself set guidelines for ways to spend your money on a monthly basis that leads to more freedom, more security, and at the end of the day, a brighter future for yourself. If you’re stuck in the cycle of overspending or mismanaging your money or not understanding your budget, you need to break free from the cycle immediately, and most importantly understand the breakdown of how you’re doing things with your money.


The foundation and the start of this process is about categorizing your expenses into three categories. 

The first is needs, the second is the wants category, and the third is investments. The great news here is that no matter where you’re at in life, whether you’re very young or much older, you can benefit from taking advantage of this system immediately. 


Now that might seem obvious, but the reality is when you break down most people’s expenses, they don’t know the difference when they’re spending their own money. 

In truth category number one, the needs category, actually includes very few expenses, but they are things that you absolutely must cover and pay on a regular basis to identify and define them further. 

Let’s break these into the fact that they are basic human needs and they’re things that you need on a regular basis to literally survive. Let’s make sure we make that distinction. 

Needs Category

These needs, or things that you cannot live without doing or that have massive long-term consequences. If you don’t do them, are things such as the following: 

  • A Roof Over Your Head
  • You’ve gotta pay your rent or your mortgage or you will be homeless, and that is a bad place to start for financial freedom.
  • Food In Your Belly
  • You have to survive. You’ve got to be healthy and have enough energy and health to be able to go achieve the things you want to do and build the savings and build the life that you want. 

So while this can be a category that can swell or contract in size, depending on your own ability to make savings here, what I would suggest is that you think more about things like groceries and less about things like DoorDash or going and eating out because those are much, much more expensive and they’re typically much less healthy. 

  • Transportation
  • You have to be able to get around, whether that’s work or to be able to get your kids to school or go pick up your mail.  You have to be able to move around, which means at car payment, and you must be able to pay for fuel or electricity to be able to get your car to move around places. 
  • Insurance
  • This includes home, this includes auto, this includes health. These are things that you must have covered because if you don’t, there are long-term consequences to not having your insurance in place.
  • Paying Down Existing Debt and Mandatory Obligations. 
  • So if you must make a minimum payment on say, your student loans or a credit card payment somewhere, then that is included in this category because if you don’t make this mandatory payment, your life will get much worse on a longer scale. 

So we want to budget that into the needs category as the first category that always gets paid. 

Wants Category

The next category is the wants category, and this category is things that you want but don’t need in order to survive. Things that can definitely make life better or a better experience or more fun or even you could argue make life worth living, but at the end of the day are not things that you must do in order to survive this category so that you understand is going to be the most flexible. 

This is gonna include all the entertainment and food and fun and drinks and all the other stuff that you could flex down in the event that you had a longer term that you wanted to put more of your money towards. 

Now, the distinction here between needs and wants is vital to this discussion and understanding the 50/30/20 rule, because as this category swells, which it does for so many Americans in our consumer-driven culture, is that as this category swells, it contracts the rest of the categories in a major way and generally brings down the quality of your life over the long term. 

This category can include many things such the following:

  • Entertainment
  • a broad category, but typically can be one of the most expensive in your budget.
  • Travel
  • New clothes, even things like gadgets. Your new iPhone that you get every year, the Apple watch, which was cool, but you didn’t really need it and it’s some extra hundreds of dollars on your expenses that you didn’t budget for. Things like that all fall into the wants category. 

Essentially anything that you say, “Hey, would be nice to have, or nice to experience, or nice to do.”, are things that are gonna fall into the wants category. 

Some of these might be obvious bad expenses where you know you spent too much when you were traveling or you know you bought something that you didn’t really need but for a second, let’s differentiate some of the big expenses that actually fall into the needs category, but can go into the wants category when you don’t define how much you’re willing to spend on those. 

Three things that fall into your NEEDS

Typically these justify themselves as in the needs category when they’re actually in the wants category as follows: 

  1. Car
  2. Living situation
  3. Food that you eat
  • Car
  • It’s so easy to say, “Hey, I’m gonna get this car instead of that car.” The payment is only a few hundred bucks more, etc. But just that marginal increase of several hundred dollars adds up significantly over a period of time and can really impact your budget. I’ll show you an example of that. 
  • Apartment
  • If you’re choosing a living situation that is outside of what you actually need, then you have to understand that extra money being spent is actually in the wants category. It’s not something that you need, so that’s fine. 
  • Food that you eat
  • If you build it into your budget, like let’s say a nice apartment is just super important to you and you’re willing to scale back other areas to get there, that’s okay. But just understand that anything above your needs, the extra money that you spend goes into the wants category and eats away at the other things that you could be doing or experiencing and the same thing applies here to meals. I think we all have the running joke at this point that your $20 meal that you ordered on DoorDash shows up and it’s like $54, right? With all the fees and expenses and taxes, etc. The reality is that adds up very quickly and a handful of those can really throw off your budget in a quick way. Whereas if you took that extra money and you did something profitable with it or did something smart with it and just ate the healthier food that you got in your freaking fridge or through your groceries, life would be better in many ways. 


Well, now we get to jump into the meat and the potatoes of this, the personal finance strategy called the 50-30-20 rule. So now we’ve identified the three categories of needs, wants, and investments. 

So what that means is a budget system where you take:




Keep in mind, as a reminder, we’re talking about after-tax income because if you don’t budget this correctly, what ends up happening is the majority of your money goes towards your needs and then a little bit goes towards your wants and you’re like, “Hey, I’m not even living this amazing lavish life.” Where’s all my money going? It’s that you’re overspending on the needs category when you could bring down that expense and the worst part of this when you’re mismanaging it and you’re budgeting on your pre-tax income and not your after-tax income, is that no money or very little money is going towards the investment category, which is the fastest way to kill your financial future on the long term. 

Now, the flip side is also true if you stick to this and budget accordingly, this strategy is so incredibly powerful for you to achieve financial freedom on a long-term basis. If you stick to this breakdown and you enforce this budgeting, you will see your net worth and your overall life improve dramatically. 


Let’s use an example of a nice round figure of $100,000, which is fairly common in the workplace today. 

Now, wait a second. That 100,000 is pre-tax income. So let’s do the appropriate math here and deduct your federal income taxes as well as your contributions to social security and Medicare. 

If you get a pay stub, this is a lot easier to calculate because you just look at what’s on your pay stub from your payroll. But on average, these required deductions should reduce your take-home pay by right around 25%. So let’s use that for this example to keep the numbers round. That means for this example, you have a take-home after-tax income of $75,000 to apply to the 50-30-20 rule. 

$75,000 /year divided by 12 months

=   $6,250 per month to spend accordingly. 

If you apply this to the 50-30-20 rule, that should be a breakdown of

NEEDS = $ 3,125

WANTS = 1,875 

 INVESTING = $1,250

As mentioned earlier, each category impacts the others, especially the needs category. So if you’re spending over $3,125 per month on needs, the other categories are going to be impacted very much because of that. 

The needs category is gonna be the first place we’re gonna look at to reduce expenses in your lifestyle. 

So what should your budget look like in this example? 

Well, with 50% of your budget going towards needs, it’s up to you to decide how much goes to each item within the needs category and again, this is a sliding scale, so spending more on your rent or mortgage is going to leave less for your car payments, your groceries, etc.

Remember, spending more than you need on your needs category as a whole reduces how much you can spend on your wants category by quite a bit. So it’s important to be prudent here when planning out your needs first. 

This is why this exercise is so powerful: getting ahead of your expenses and planning out and sticking to that plan and understanding how each expense folds into the big picture is something that can save you so much money and you can find areas to pick up savings and get more money into the investment category. 

Overall, it’s powerful to plan. So go through this and spend the time on this exercise breaking these numbers down. So let’s look at a common pitfall that can happen when someone overspends in the needs category. 

Let’s say you have the following items in your needs. 

  • $2,000, Budget rent 
  • $700 auto payments, gas maintenance, etc
  • $300 insurance costs a month 
  • $100 utilities
  • $800 groceries, 
  • $100 student loan
  • $100 credit card, minimum payment

= $4,200 / month 

Now remember, your budget for the month for the needs category was $3,125. 

So it looks like you’re exceeding your needs budget by a total of $1,075 and a reminder that every month that you’re exceeding your category by $1,075 if this is your expense breakdown. 

So the obvious question is, can you decrease any of these budgeted expenses? 

Now looking at the breakdown of that list, you might be able to do some things like moving into a smaller, more affordable apartment or buying a cheaper car with much cheaper payments and having some savings there. But admittedly no matter how often, or how much you can reduce expenses in one area, there might be some months where you run over or there might be expenses that are going to be more expensive for you depending on your city or your living situation. 

So in the event, you’re not able to make some changes and bring down the costs of your needs on a monthly basis, then you have to reduce the wants column by that amount. 

In this example, that amount is $1,075 that you would need to reduce it from the wants category. So if you’re keeping track of the budget, that leaves you with a whopping $800 left for your wants category and why is that something that you should so strictly enforce? Why is it that you couldn’t just reduce investments by a little bit that month? 

Because the number one thing to understand here, and the number one goal of this breakdown is to make sure that you’re meeting the minimum of 20% of your take-home income going towards investments on a monthly regular basis and while that’s the last category that typically gets money from most people or doesn’t get any money, like many people in America today, the investment category is also, the category that opens the doors to a financial future with freedom and abundance and stability for yourself and your family members. 

So don’t ever skimp out on that. That’s the reason that this budget breakdown exists. So in this case, if you overspent on the needs category and you only have $800 left for the month of your wants category, might look something like this:

$300 = entertainment, clothing, 

$200 = electronics, and streaming services, 

$150 = gym memberships, 

$50 = bucks and miscellaneous,

$100 =  for random things that might happen throughout the month.

= $800/month

If you’re feeling like this might be tight for your lifestyle, then it might be a good idea to cut back on expenses in other categories or look at your needs category and see where you could cut back there as well and remember, the point of this is not to deprive yourself. The point of this is that you are strategically putting your money towards what’s most important for you. 

So let’s say that travelling is the most important thing for you and you wanna set aside a budget for travel on a regular basis, that’s fine, and you should absolutely do that, and it’s extremely important for you. So budget around it, reduce expenses in other areas, and know that travel is an important protected item for you after you protect it from investing.

Alternatively, there is something else that you can do to alter your budget here, and that adjusts the input to make more money. I’m a huge fan of bringing this up, and a lot of people don’t like this discussion because they feel locked into their job or a situation somehow. But the reality is if the money side, the income side is so tight for you, no matter how much you adjust and tighten expenses, it might not be enough for what you’re looking for out of life. 

The reality is you can only save so much. There is a minimum threshold of expenses that you can reach every month, and the reality is, even in a perfect world, you can only save to zero. 

That means that you only have your income and you only your expenses. So if you’re not able to reduce the expenses by X amount, then the other input to adjust your life is to make more money, and just like you can only bring expenses down to zero in an absolutely perfect world, the reality is that the income column can go up exponentially or even almost forever. 

There’s much more upside on income than there is downside protection on expenses. So really the best world is doing both, but I’d just like to keep that little nugget in there that your mind should never shut off to the other alternative of finding new ways to make more money so that your expenses can accommodate your lifestyle and that you can also invest more money into the long-term, which again, is the goal here. 

20% of your income goes to Investing

As a reminder, this is the most important category. This category, the last 20%, the last category to receive the last bit of your money is the most important. So it should be protected at all times because it represents all of the things in your future that you want to achieve and experience and enjoy in your life. In this example, the amount we have set aside is $1,250 for the budget that we’re discussing, and at this point, I’d like to interject and add a caveat to that last 20% investment category and that is if you don’t have an emergency fund, then this is also the amount of money that you’d like to set aside from that 20% to put into that emergency fund and if you don’t have an emergency fund, the best time to start is right now and build one so that when the time comes that you might need it, that it’s in place. 

Once that’s started, you want to keep adding to that emergency fund until you have about three to six months of expenses covered, sitting there, ready to go. In the worst-case scenario, many people say that sounds a little crazy. 

Three to six months of expenses sitting there in cash available at a moment’s notice. That sounds crazy. Well, let’s look back to a little thing during Covid. It was a hard time for everyone. The entire country was going through a hard time at Saint. We had our investments, which make up the foundation of the entire company, and every dollar of income that we make, we saw them fluctuate wildly up and down things all over the place, having to help tenants and work through their situations because they were suffering. 

Also, thankfully, we invest pretty conservatively. So the vast majority of our investments did very well and just kind of hummed along and did okay, but at this time there were also a lot of uncertainties and unknowns that were occurring across the board and across the company. So what we decided to do in response and make sure that we were being conservative managers of those assets is we stopped as a company receiving our share of monthly distributions. 

Meaning when the money came in, we continue to pay our investors and we have a track record of, $110, $120 months of paying our investors consistently without missing a distribution. 

So we wanted to make sure that we kept our reputation for always paying investors, but we did something else. We stopped receiving our share of distributions as a company, meaning we essentially had no income for let’s say three to six months. 

Now if you’re keeping track here, bills didn’t stop. That means we still paid the internet every month. We still paid the electric bill, we still paid all the property expenses, we still paid all of our payroll and other expenses for vendors, etc, property managers, all of that got paid. The only people who didn’t get paid were saints, meaning the top line was almost zero, meaning all bills were paid from our savings. 

Now while you might be thinking, hey, that sounds obvious to pause distribution to yourselves and make sure things are on track, most companies did not have the advantage or the ability to be able to do this at the time because most companies didn’t build up any savings or have an emergency fund. Now, this same concept and the same strategy are true for your own life. You need to be able to weather a short-term storm of let’s say three to six months in the event that things do hit the fan in the world, which we know can happen spontaneously. 

Just a reminder, the more responsibilities you have in your life, let’s say kids, a partner, family members that rely on you, a company, employees, or investments, etc, the more responsibilities you have, the more you need to have saved to cover those in the event that something major and unexpected and negative does happen. 

Sometimes it’s a very short financial storm. If you think about the full term of American history or the market history, COVID was actually a pretty short blip on the radar, but it was a really big blip and it was very significant while it was happening. So sometimes it’s about weathering a short storm, a really bad short storm, but a short storm nonetheless. 

So having that money there and having the emergency fund in place is crucial because otherwise, if you get knocked out during that storm, it could set you back many years of savings and progress that you have already made. 

So don’t get knocked outta the race and have the emergency fund. If you’re looking for a dollar figure in the example we’re discussing, a good benchmark’s about 5% of your take-home income to go towards your emergency fund until that emergency fund is topped off and at a level that you can trust on a long-term basis. 

For this example, that would be about $300 a month. Actually, I think it’s about three 12 a month would be 5%. But setting that aside monthly can add up very quickly and can get you to a point with your emergency fund where you could focus the remainder of that 20%. Then on investing, which again is the goal. Now back to the strategy with the final 20% of the investing category. You must think about this category for what it really is. This is your freedom category. This is the money that builds your future. 

This is the money that you can retire and rely on for the rest of your life. This is the money that gives you the confidence to do big things like change careers, move to a new job, move to a new city or location, and other strategic things that could significantly benefit your life. But you must have a foundation to make that move confidently and remember that 20% going towards investments is the minimum to put on a monthly basis. So here’s something that happens commonly. Someone will continue to make more money, their income continues to go up, and what they do is they keep growing their other expenses and their needs and wants categories, and they keep that 20% going towards investments. That’s good!

At least they’re sticking to the 50/30/20. But what’s even better is don’t let your expenses swell with your income. So if your income goes up by 20%, don’t increase your expenses by 20%. Instead, put all that extra income, that extra 20% income that you’re making, and put that towards the investment category. This will increase your investments quickly over time. 

As we know, investments compound consistently, meaning they will grow exponentially if you continue to put money into them or even increase the rate at which you’re putting money into them and give your investments the time to grow that they need to hit those massive numbers on a long-term scale. 

So now your investment category is growing, you have that protection and money’s going in monthly to make sure you have opportunities there. 


Well, if you’ve been watching our videos, then you already know that my overwhelming preference is toward real estate investment funds because where else can you get the benefits of investing in real estate on a large scale without having to manage it personally and put your time into it? and if we’re being honest at the current state of the market and returns being so low, most of the time you can make more on a fund than you could if you were doing it yourself and buying the properties in your own portfolio. But there also are many opportunities that may be a good fit for you as well. Things like stocks, things like ETFs and although both of those have gotten crushed in the market lately, and although both of those categories have gotten crushed in the market lately reality is they’re probably safe and quality bets over the long term if you choose wisely. 

Now, other good options are maxing out your 401K or your IRA investments and talking to your financial advisor to see what options they have available and their feedback on what decisions you are gonna make while there are many, many good options for investments, the number one takeaway for this video is to always protect a minimum of 20% of your take-home income to set aside for that investment category. 

So it’s always growing and you are always making sure that your future is bright. Also, a word of advice if you’re looking to learn about a lot of investment opportunities and some analysis and get some real-life examples of deals that people are doing. I recommend taking a look at the Saint newsletter as we analyze a ton of different investment options that are really on the plate and are really operating today.