It’s a common myth that wealthy people don’t need to budget. From my own experience and from observing my mentors, the opposite is true. Those who were born into wealth budget to preserve it for future generations—to keep the family vacation home and ensure their kids get the best education. Those who built their wealth from the ground up budget because it’s the very tool that got them where they are, and it’s what will keep them there. The only wealthy people who don’t budget are often the ones who won’t be wealthy for long.

Here’s the reality: unless you’re earning an astronomical, private-space-fleet amount of money, you need a budget to secure your financial future. You might think the point of being rich is to stop worrying about money, but that’s not quite right. For the wealthy, budgeting isn’t a source of stress; it’s a source of opportunity. It’s the engine that powers a wealthy lifestyle. This approach to Personal Wealth Management is what makes all the difference.

So, What Exactly Is a Budget?

At its core, a budget is simply a plan for your money. It’s a strategy for using the resources you have to get the results you want. You already have the skills for this. Think about how you plan your week—maybe you schedule your workouts around when you want to wash your hair for a date night. You strategize. Budgeting uses that same part of your brain to deploy your dollars effectively. You've got this.

Let’s clear up a few common misconceptions about budgeting.

• Budgeting isn’t about deprivation. A budget should absolutely have room for things that bring you joy. If your budget makes you miserable, you won’t stick to it, which defeats the purpose. The goal is to use budgeting as a tool to afford the life you want.
• Budgeting doesn’t kill spontaneity. In fact, it enables it. Instead of panicking about whether you can afford a last-minute night out with friends, you can confidently buy a round of drinks because you’ve planned for “fun money.” It’s an outline, not a script, and knowing your bases are covered frees up mental energy for day-to-day spontaneity.
• Budgeting is about self-acceptance, not shame. The first step in budgeting involves taking a hard look at your spending habits. Seeing that you spent $700 on takeout last month can be tough. Many people react to this shame by avoiding the issue altogether. But facing it is the only way forward. It might feel worse before it feels better, but it will feel better.

Think of budgeting as pregaming for your life. It’s the preparation that allows the rest of your life to be as fulfilling and stress-free as possible. Budgeting is what makes investing possible, and investing money is the fundamental truth that wealthy people understand. For them, a budget is just a plan to maximize their wealth and maintain their desired lifestyle for the long haul.

The Spending Audit: Getting to Know Your Money

Before you can create a budget, you need a clear picture of where your money is going. This starts with a spending audit, which has two simple steps: track down your financial records and put them all in one place.

Gather your bank and credit card statements from the last month or two. Avoid November and December if you can, as holiday spending can skew the results. You can download these as PDFs or export them to a spreadsheet. Don’t forget major expenses that might not be on your card statements, like rent, mortgage, or student loan payments. Once you have everything, consolidate it. Whether you use a spreadsheet, a notebook, or printouts with a highlighter, the goal is to see everything together.

Next, group your expenses into categories like Housing, Groceries, Dining Out, Transportation, and Self-Care. Then, use a simple color-coding system to classify them:

• Red: Truly non-negotiable expenses you can’t cut, like rent or your car payment.
• Yellow: Necessary but flexible expenses, like groceries or your cell phone bill.
• Green: Discretionary, or “fun,” expenses, like movies, drinks, or concert tickets.

Start by looking at your green categories. Do a quick vibe check. Does the amount you spent on DoorDash make your stomach drop? Does the money you spent on concert tickets still make you smile? Note these feelings. This isn’t about judgment; it’s about understanding what spending actually brings you value. This is the first step toward building a Mindset for Financial Success.

Crafting Your Custom Budget

Building a budget is like getting a manicure—there are many styles, and you should pick the one that works for you. Here are a few popular methods to get you started.

• 50/30/20 Budgeting: This is a simple framework: 50% of your take-home pay goes to needs, 30% to wants, and 20% to savings and investments. It’s great if you want clear guardrails without a lot of complexity.
• Zero-Based Budgeting: With this method, every dollar gets a job. Your income minus your expenses should equal zero because you’ve allocated everything to a specific purpose. It’s more hands-on but excellent for those with irregular incomes, like freelancers.
• Reverse Budgeting: This is the “pay yourself first” strategy. You decide how much to save and invest, move that money aside immediately, and then live on the rest. It’s a powerful way to build savings if you struggle with overspending.
• Half-Payment Budgeting: If you get paid twice a month, you split your bills between your two paychecks. This can make big expenses like rent feel more manageable and prevent that end-of-month broke feeling.

Saving: The Foundation of Financial Security

Let me tell you two quick stories. The first is about how I accidentally chopped off the tip of my finger and ended up with a $1,300 medical bill after insurance. My emergency fund meant I could pay it without going into debt. The second is about how I saved up $6,500 to send my parents on a luxury cruise for their 30th anniversary. My sinking fund made that dream a reality.

These stories illustrate the two core purposes of saving: it protects you when life goes wrong, and it helps you achieve your goals when things go right. Saving gives you options and helps you make decisions from a place of abundance, not desperation. This is the bedrock of Financial Empowerment.

How to Bank Like a Pro

Wealthy people treat banking strategically. They shop around for the best accounts and aren’t afraid to ask for what they want, because they know banks need their business. Here’s how you can do the same:

1. Use Multiple Checking Accounts: Set up different checking accounts for different spending categories (e.g., one for bills, one for groceries). Then, have your employer split your direct deposit across these accounts. It’s an automated budgeting system.
2. Open a High-Yield Savings Account (HYSA): Don’t leave your savings in a traditional account earning next to nothing. HYSAs, typically offered by online banks, pay significantly more interest, helping your money grow faster while it sits.
3. Build Your Emergency Fund: This is your top priority. Aim to save 3-6 months of essential living expenses in a HYSA. This fund is your safety net against job loss, medical emergencies, or unexpected repairs.
4. Create Sinking Funds: For planned future expenses—like a vacation, a new car, or a wedding—set up separate savings accounts. Breaking down a large goal into smaller, regular contributions makes it feel much more achievable.

The Power of Negotiation

Instead of stressing over a $5 coffee, focus your energy on negotiating your biggest expenses. You can save thousands of dollars with a few phone calls. Everything from your cell phone and internet bills to medical bills and car prices is negotiable. The key is to do your research on what competitors are offering and remember that companies would rather give you a discount than lose you as a customer. Don’t be afraid to ask for a better deal—the worst they can say is no.

Investing Fundamentals: Making Your Money Work for You

Budgeting and saving are crucial, but they won’t make you rich. Investing is how you build true wealth. It’s how you get your money to start earning money for you. And it’s not as complicated as it seems. Here are the core ideas behind investing for beginners.

Six Steps to Start Investing

1. Understand What Investing Is: It’s not about frantically day-trading stocks. It’s about putting your money into assets that have the potential to grow in value over the long term. You’re in the storage business, not the moving business.
2. Have a Solid Financial Base: Before you invest, make sure your emergency fund is in place. You don’t want to be forced to sell your investments at a bad time to cover an unexpected expense.
3. Know Your Debt: You don’t have to be debt-free to invest. The key is the “delta”—the difference between your debt's interest rate and your investments' potential return. Pay off high-interest debt (anything over 7-8%) before you start investing heavily.
4. Use Tax-Advantaged Accounts: The government offers tax breaks to encourage you to save for retirement. Prioritize accounts like a 401(k) or an IRA to reduce your tax bill and supercharge your growth.
5. Define Your Goals and Timeline: Your investment strategy depends on your goals. For long-term goals like retirement, you can afford to take on more risk for higher potential returns. For shorter-term goals, you’ll want less risky investments.
6. Avoid the Hype: Don’t invest in something just because you saw it on the internet. Stick to a sound, long-term strategy and avoid the temptation of FOMO and YOLO bets.

How to Start Investing: Accounts and Assets

To begin, you’ll need to open an investment account at a brokerage (like Fidelity, Vanguard, or SoFi). Here are the most common account types:

• 401(k) or 403(b): Employer-sponsored retirement accounts. If your company offers a match, contribute enough to get the full amount—it’s free money!
• IRA (Individual Retirement Account): An account you open on your own. You can choose between a Traditional IRA (tax break now, pay taxes in retirement) or a Roth IRA (pay taxes now, tax-free withdrawals in retirement).
• HSA (Health Savings Account): If you have a high-deductible health plan, an HSA is a triple-tax-advantaged powerhouse. Money goes in tax-free, grows tax-free, and comes out tax-free for medical expenses.
• Individual Brokerage Account: A standard, taxable account with no contribution limits. Use this after you’ve maxed out your tax-advantaged options.

Once your account is open, you need to buy assets. For most people, a diversified portfolio of low-cost funds is the best approach. You don't need to pick individual stocks.

• Index Funds: These funds hold all the stocks in a specific market index, like the S&P 500. They’re a simple way to bet on the long-term growth of the overall economy.
• Target-Date Funds: These funds automatically adjust their mix of stocks and bonds to become more conservative as you get closer to your target retirement date. They offer a simple, set-it-and-forget-it approach.

A great way to get started is with a robo-advisor, which will build and manage a diversified portfolio for you based on your goals and risk tolerance. It's an easy, low-cost way to get professional-level management and a great first step on your journey toward Financial Empowerment.