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Why Your Budget Shouldn't Look Like Everyone Else's

You know that moment when you realize the 50/30/20 rule is telling you to spend $5,000 a month on "wants"? Yeah… that's when traditional budgeting advice breaks down for high earners.

Here's the thing: When you're making $200K+, following conventional percentage-based budgeting is like wearing a suit that's three sizes too big.

It technically covers you, but it's not doing you any favors.

The Fundamental Shift: From Percentages to Purpose

Traditional advice says: Save 20% of your income.

Reality for high earners: Your needs don't scale linearly with income.

When you're earning $50K, that 20% savings rate means $10K a year (barely an emergency fund). And when you're earning $250K? That same 20% is now a whopping $50K!

Here’s the thing… I’m going to guess that your actual needs likely didn't increase 5x, right?

But if you follow that budgeting method, you’ll soon find yourself in a "lifestyle inflation trap" that can be incredibly hard to get out of.

Just because you can spend 30% on “wants” doesn't mean you should. Instead, flip the script entirely.

The Reverse Budget Method

Instead of allocating percentages, try working backwards:

Step 1: Define your "enough" number 
What does a genuinely comfortable life cost you? Not lavish, not restrictive… comfortable. For most high earners, this is surprisingly lower than their current spend. Maybe it's $8-10K/month. Lock this in.

Step 2: Set absolute savings goals 
Not percentages, actual numbers. Want to retire at 55? You need $X. Want to fund your kids' education? That's $Y. Want to start a company in 5 years? That's $Z in runway.

Step 3: Everything else becomes strategic capital 
This is where it gets interesting :) That gap between your fixed lifestyle cost and savings goals? That's not "fun money", it's now strategic capital for building wealth.

What Step 3 Actually Looks Like

Now there’s many ways you can tackle this (it all really comes down to your own situation) but here are some general tips on how to deploy that strategic capital, in order of priority:

First, eliminate high-interest debt:

• Credit cards (15-25% APR)

• Personal loans

• Any debt above ~7% interest

• (Keep mortgage and low-interest debt - you can likely out-invest those rates)

Then, max out everything tax-advantaged:

• 401k/Solo 401k - $23.5K/year ($1958/month)

• Backdoor Roth IRA - $7K/year ($583/month)

• HSA if eligible - $4,300/year ($358/month)

• 529s if you have kids

Next, accelerate wealth building:

• Build your opportunity fund (for investments, not emergencies)

• Index funds in taxable accounts

The Bottom Line

Traditional budgeting is about restriction. High-earner budgeting is about optimization. You're likely not trying to figure out how to cover your basic needs, rather, you're more likely trying to figure out how to turn high income into permanent wealth.

So to recap:

1. Lock in your lifestyle cost (and try to keep it flat for years)

2. Max out every tax-advantaged account available

3. Invest and/or store the surplus

4. Resist lifestyle inflation like your wealth depends on it (because it does)

Remember: Your high income might not last forever. Layoffs, industry changes, life circumstances— things change.

It’s what you do during these peak earning years that determines whether you're going to be wealthy or just well-paid.

What's your take on this? Are you falling into any of these high-earner traps? Hit reply and let me know—I read every response.

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If you want more resources on building wealth as a solopreneur/entrepreneur, check these out:

• The Solo 401k handbook

• The Roth IRA handbook

• The Self-Directed IRA handbook

• The Guide to Paying Less in Taxes

• What is a Solo 401k?

• How to Open a Solo 401k