There’s an eternal struggle between saving money and enjoying life. But what if there is a better way? Imagine eating at nice restaurants or going on vacation, while still building wealth. If this sounds nice to you, then let me introduce the 50 – 50 rule to financial freedom.

If you’ve never heard of the 50 – 50 rule, that’s okay. This is a financial system most experts and advisers never talk about.

Why?

Because it’s a bit too hardcore for your average person.

That said, if you make enough money, following the 50 – 50 rule is completely doable. Allow me to explain.

What Is The 50 – 50 Rule?

The 50 – 50 rule is dead simple. You take 50% of your money and invest it. The other 50% covers your bills, entertainment costs, and anything else you want to buy.

It’s the easiest savings strategy for high earners.

Let’s say you’re making $20,000 a month at your corporate job. After taxes you’re left with about $14,000 or so. If you bank half that, you’re saving a little over $233 per day. This adds up to $84,000 per year.

($1 Million In 10 Years, You Can Do It!)

Invest $84,000 a year for 10 years (at you’re standard 7% annual returns) and you’re a millionaire within one decade or less.

Best of all, you didn’t have to cut corners or live frugally to achieve this. Even with you’re insane savings rate, you still enjoyed another $7,000 per month in spendable income.

How Anyone Can Try This Technique

Not everyone is a corporate manager pulling $20,000 a month. And that’s okay! Even if you’re making less, you can still give the 50-50 rule a go.

One way to do this is by modifying the principles a bit. Instead of saving 50% of all post-tax income, you save 50% of whatever’s left after paying your rent/groceries/electric bill.

This means you’re saving your 50% of your disposal income. Not 50% of every dollar you earn.

Doing this is still a noble goal and one which helps cut out needless expenses while building your investment funds. It’s also what I personally do, and it allows me to save well into the five-figure range each year.

Why The 50 – 50 Rule Works

A 50% savings rate is huge, especially if you’re a high earner. And, it still helps you invest massive amounts of cash at any income level.

Consider this: traditional financial advice says “save 10% of your annual income.”

Make 250,000 and that’s $25,000 to invest. Earn $50,000 per year, and you’re only putting $5,000 towards retirement. That’s not a whole lot.

With the 50 – 50 rule, someone making $250,000 per year is investing up to $125,000 (depending on taxes). Meanwhile, if you’re earning $50,000 and your lifestyle costs $35,000, you’re saving up to $7,500 (depending on taxes) each year.

In both cases you’re building wealth at a much faster rate than the traditional 10% savings rule allows.

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