Let me tell you something that will change your life if you let it sink in. The richest people in the world are 75% entrepreneurs, 15% investors, 7% inheritors of wealth, 3% athletes, entertainers and artists, and 0% employees who just earn a salary.
So if you want to know how to manage your money like the 1%, you have to understand what those first four categories have in common. Let’s think about it. Entrepreneurs own businesses, investors own assets, rich kids own trusts, and finally, athletes, entertainers and artists own rare skills.
So it’s clear: if you don’t own something, you are what’s owned. That’s the secret most people miss.
So how can you start owning things like the 1%? Well, you need to follow the 25-15-50-10 rule. No matter what your income, you can manage your money like the top 1%, because the truth is it’s not about how much money you make, it’s about how you manage what you make.
I’m not just some theorist. I’ve actually used this rule for a long time, and it’s enabled me to become a millionaire, even though I started out with no money and no qualifications.
The 25% Rule: Growth – Make Your Money Work for You
The first 25% of your income should be going towards growth. This is the 25% that works for you. By growth, I don’t mean some kind of mindset nonsense about growing as a person with the power of meditation. I mean using this money to buy things that increase in value.
When most people get their paycheck, they pay the bills and then blow the rest on useless things they don’t even remember buying. This is exactly why 99% of people are trapped owning nothing of value. The truth is, this is all by design. The system wants us rich for a week, then broke by the end of the month waiting for the next payday, so we’ve got no breathing room and then we’re forced to work even harder next month just to keep up. This is effectively modern day slavery.
Just think about it. Slaves used to work every day with no pay, but they got free food, shelter, and water. Today, people work nearly every day and get paid. However, their money is mostly spent on food, shelter, and water. The only thing that has changed is the illusion of freedom.
Once you understand this, you can start fighting back by taking that first 25% of your income and putting it straight into assets. This is anything that grows in value over time and puts money in your pocket. The idea is that while you’re out working, these assets that you own are working for you in the background. Eventually, these assets could even make you more money than your day job.
The Power of Starting Early
You might think you don’t have enough money to invest in assets. However, you need to find the money, because the sooner you start, the better. Let me show you something that will blow your mind.
A person named Billy. He started investing $200 a month at 20 years old.
Another Person Phil. He didn’t start until he was 30, but to catch up, he invested $300 a month. Let’s fast forward to when they reached 60, and they both stopped investing.
Billy put in $200 per month for 40 years, so that’s a total of $96,000. However, Phil put in $300 per month for 30 years, which is a total of $108,000. So Phil ended up saving more money, right? Well, not exactly, because they were investing instead of just saving.
If we assume an average annual return of 10%, which is the average return of the S&P 500 over the last 100 years, then the numbers start to look a little bit different. Phil’s investment will be worth $678,146. Not bad. Whereas Billy’s investment would be worth a staggering $1,264,816.
How crazy is that? Billy invested $12,000 less, but ended up with nearly $600,000 more all because he started earlier. That’s the power of compound growth. That’s why you should start now, even if it’s small, because waiting will cost you more than you think.
Step 1: Select Your Growth Assets
There are loads of ways to grow your money, but not all of them carry the same risk or reward. I like to think of them as a scale from relatively safe and steady to high risk, high reward.
At the lower risk end:
- Index funds – This is where most people should start. You are not trying to pick winners. You are just buying a slice of the whole market, like the S&P 500. You don’t need to check charts or time the market. You just let it sit there and grow quietly in the background.
- Real estate – That could be rental property if you’ve got the money or REITs if you haven’t. REITs let you invest in real estate without buying a property. It’s kind of like buying a small share in a building with a bunch of other people.
In the middle:
- Skills – Learning a skill that makes you money is hands down the fastest return on investment you’ll ever see. I’m talking about things like copywriting, editing, sales, coding, anything you can actually use to bring in income. Unlike stocks or property, no one can take it away from you.
Further up:
- Online businesses – Stuff like dropshipping and selling digital products. These can pay off big, but they take a lot of effort and you’ve got to be ready to fail a few times before you find your groove.
- Individual stocks – I know it’s tempting to try and pick the next Tesla, but unless you’ve done your homework and you really know what you’re doing, you’re basically just guessing.
At the top:
- Alternative investments – I’m talking Bitcoin, Ethereum, NFTs, gold, wine, sneakers, you name it. Can you make money with these? Absolutely. Can you lose it overnight? Also, absolutely.
Step 2: Set Up Tax-Advantaged Accounts
If you’re investing through the wrong kind of account, you could be handing over thousands in unnecessary tax without even realizing it.
For the UK:
- Stocks and Shares ISA – You can invest up to £20,000 a year and anything you earn is tax free.
- Workplace pension – Usually you’ll put in 5% and your employer will match with 3%. That’s basically free money.
For the US:
- Roth IRA – You invest money you’ve already paid tax on, but every penny it earns grows completely tax free. The limit is $7,000 a year if you’re under 50. Even billionaires use this account. Peter Thiel reportedly turned his Roth IRA into over $5 billion.
- 401k – The money you put in comes out of your paycheck before tax and grows without being taxed while invested.
Step 3: Start Investing
The best thing you can do is set up a monthly transfer that goes straight from your bank account into your investment platform, ideally on payday. That way you never even see the money sitting in your account and get tempted to spend it.
One of the most popular methods is to build a three fund portfolio :
- US stock index fund – Invests in US-based companies like Apple and Amazon.
- International stock index fund – Covers companies outside the US
- Bond fund – Helps provide stability and smooth out market ups and downs.
Once your investing is automated, your job is simple: stop fiddling and go make more money. The people who build wealth aren’t the ones picking the fanciest stocks. They’re the ones consistently putting in more over time.
The 15% Rule: Stability – Your Financial Safety Net
The next 15% of your income should be going towards stability. This is the 15% that keeps you in the game. A lot of people don’t realize that not all your money should be thrown into growth investments or spent. Some of it needs to be set aside to protect your progress.
I wish someone had told me that when I was younger, because I had to learn it the hard way. I didn’t grow up around money, so when I turned 18 and needed a car to get to work, I didn’t have any savings set aside. I took out a loan and bought myself a VW Golf. For about three months I felt like I was on top of the world.
Then out of nowhere, the engine blew up. I had no backup, no safety net, and no clue what to do. If I didn’t get the car fixed, I’d lose my job. So I borrowed even more, which piled on more debt, more pressure and more stress. That car didn’t just break down, it broke my finances and set me back a whole year.
If I just had 15% tucked away for stability, I’d have been in a completely different position. Most people don’t have a money problem. They have a stability problem. One unexpected bill, and it all falls apart.
Step 1: Calculate Your Stability Fund
First, list out your core expenses: groceries, rent, utilities, transportation, and any essential services. All of those things combined give you your monthly baseline.
Let’s say that adds up to $1,500 per month. Take that number and multiply it by five months. This equals the ideal stability fund you should be aiming to save. In this example, that should be $7,500.
Each month when you get your paycheck, 15% of your wages should be going towards building up this figure.
Step 2: Store It Correctly
Where you store this money is just as important as having it. I’ve got three rules I always stick to:
- It must be easy to access – Available within 24 hours max. Don’t lock it up in accounts that penalize early withdrawal.
- It must be zero risk – Don’t put your emergency fund into the stock market, crypto, or anything meant to grow over years.
- It must always earn – Use high yield savings accounts with 4-5% interest rates to fight inflation.
Step 3: Stack It Quickly
I used three tactics that stacked on top of each other to accelerate my savings:
- Paycheck sweep – Take 15% of your income the second it lands and move it straight into your emergency fund.
- Replacement promise – If you dip into your stability fund, immediately replace it with your next paycheck.
- Save by spending hack – Use roundup apps that round purchases to the nearest dollar and save the difference, or put cash back rewards straight into your stability fund.
The 50% Rule: Essentials – Feed You, Not Your Ego
The next 50% of your income should be going towards your essentials. This is the 50% that feeds you, not your ego.
Surprisingly, over 60% of Americans earning over $100,000 a year still live paycheck to paycheck as most are too caught up in trying to look rich instead of actually becoming rich. This shows that you can be on a great salary and still feel broke every month, because it’s not about how much you earn, it’s about how much you waste.
Step 1: Get Clear on Your Essentials
Essentials are the things that keep you alive and functioning: rent or mortgage, groceries, utilities, transport, insurance, and basic clothes. Not the latest designer drops. Just what you absolutely need.
What doesn’t count: takeout, unused subscriptions, gym memberships you don’t use, streaming services you forgot about. If it’s not helping you live, work or stay healthy, it probably doesn’t belong in your 50%.
Why cap it at 50%? Because the average person is already spending 60-70% of their income on what they think are essentials. Blocking your lifestyle at 50% forces you to eliminate what you don’t need and changes your mindset from wanting to spend more to wanting to earn more.
Step 2: Shrink the Two Key Categories
Focus on the biggest expenses first:
- Housing – Always renegotiate your rent when the lease is up. Consider house hacking: renting out a spare room, splitting a place with roommates, or moving back with parents while building your buffer.
- Transport – Car payments are wealth killers. Buy used, reliable cars that have seen most of their depreciation. In walkable areas, consider eliminating the car entirely to save on payments, insurance, maintenance, and parking.
Step 3: Use Rules, Not Willpower
When you’re tired, stressed or bored, your willpower disappears. Build systems that make the right choices automatically. I used these questions to avoid unnecessary purchases:
- Is this an impulse purchase? If yes, use the seven-day rule – wait a week and see if you still want it.
- Are you buying for the brand or the value? If it’s the brand, find an unbranded alternative.
- Will this improve your life? If not, it’s probably just about impressing someone or chasing dopamine.
The 10% Rule: Rewards (Keep Yourself Sane)
The last 10% of your income should go towards rewards. This is the 10% that keeps you sane.
Money isn’t just about growth, stability and essentials. You’re allowed to enjoy it too. Most people skip this entirely and then wonder why saving feels so pointless. 92% of people say they overspend after intensive saving sprints because saving without joy starts to feel like a punishment very quickly.
Step 1: Make It Guilt Free
You can spend your 10% on whatever you like, but some categories are more valuable than others:
- Vacations – You’re buying memories that last forever and investing in your health.
- Hobbies – Keeps you passionate and helps you work harder for longer.
- Nights out – Maintains your social network, which is crucial for success.
- Gifts – For loved ones, not yourself. Strengthens relationships and connections.
Step 2: Preload the Fund
Open a separate account called your “joy jar.” Set up an automatic transfer of 10% of whatever you make to be deposited into this account every month. If you make $2,000, send $200. If you make $10,000, send $1,000. The percentage keeps it sustainable.
Don’t cheat by topping up from other categories. If you hit zero, wait until next month.
Step 3: Prioritize Experiences
If your joy jar isn’t large yet, prioritize experiences above anything else. People always say “what are you saving for?” but wealth isn’t about buying things – it’s about buying freedom and experiences.
My 10% goes on things I’ll actually remember: ski trips, great days out, meeting people, weekends away. I don’t need a garage full of cars or shelves full of designer gear. That stuff might look rich, but it doesn’t feel rich to me.
The Complete System: Why It Works
The 25-15-50-10 rule works because it mirrors what the wealthy actually do:
- They own assets that grow (25% to growth)
- They protect their progress (15% to stability)
- They live below their means (50% to essentials)
- They enjoy the journey (10% to rewards)
This isn’t about deprivation – it’s about intention. It’s about making your money work as hard for you as you work for it. The wealthy don’t get rich by accident. They follow systems, and this system gives you the same framework they use, scaled to any income level.
It’s not about how much money you make, it’s about how you manage your money. Start with whatever income you have now, follow the percentages, and watch as your financial life transforms from chaotic to controlled, from broke to building wealth.
The path to financial freedom isn’t complicated, it’s just disciplined. And discipline, unlike luck or inheritance, is something anyone can develop.