You work hard, make a good income, and pay your bills on time. But despite your success, you may still wonder: Am I using my money in the right way?
If you’ve ever felt like you’re making good money but not making meaningful progress—toward savings, investments, or financial freedom—you’re not alone. Many professionals in their 30s and 40s earn well but aren’t sure if their budget is truly working for them.
So, how do you know if your money is flowing in the right direction? It’s time for a financial wellness check-up. These simple “pulse checks” will help you measure where your money is going and whether adjustments are needed to align your financial habits with your long-term goals.
And if you need help fine-tuning your budget or making a financial plan that works for your future, we’d love to talk. Schedule a meeting with one of our financial planners today!
Housing Expense Pulse: Are You Overpaying for Where You Live?
🏡 Which Phase? Foundation Phase – Managing housing costs is essential to building a strong financial base.
Formula:
(Mortgage Principal + Interest + Property Taxes + Insurance) ÷ Gross Monthly Income (GMI)
➡ Rule of Thumb: Housing costs should be ≤ 28% of GMI
🔹 If higher: You might be “house rich, cash poor.” Consider refinancing, downsizing, or reallocating funds from other areas. If renting, this rule still applies—your rent should not exceed 28% of your gross income.
✅ Example: If your monthly income is $10,000, your total housing expenses should be no more than $2,800.
📌 Learn more about the Foundation Phase and how to build financial stability.
Consumer Debt Pulse: The Goal is ZERO
💳 Which Phase? Foundation Phase – Paying off consumer debt is critical before focusing on wealth-building.
Car loans, credit cards, and personal loans can drain your ability to save, invest, and build wealth. Our goal is always to eliminate consumer debt entirely—but if you’re still working toward that, here’s a guideline to ensure debt isn’t taking over your finances.
Formula:
Total Consumer Debt Payments ÷ Net Monthly Income (NMI)
➡ Rule of Thumb: Consumer debt payments should be ≤ 20% of NMI but ideally heading toward 0%
🔹 If higher: Your debt is likely limiting your ability to build wealth. Prioritize aggressive repayment, trade in high-loan-value vehicles, and cut unnecessary spending to free up cash flow.
✅ Example: If your net monthly income is $8,000, your total non-mortgage debt payments should not exceed $1,600. However, the ultimate goal is to get this number to $0—so work toward reducing it as quickly as possible.
📌 Need a debt reduction plan? Talk with a financial planner today.
Total Debt Pulse: Is Your Income Overloaded with Debt?
⚖️ Which Phase? Foundation & Accumulation Phases – Keeping total debt manageable allows for future investing.
Your total debt load—including mortgage, car loans, student loans, and credit cards—should be manageable in proportion to your income.
Formula:
Total Monthly Debt Payments ÷ Gross Monthly Income (GMI)
➡ Rule of Thumb: Total debt payments should be ≤ 36% of GMI
🔹 If higher: You may be over-leveraged. This can slow down your ability to build wealth. Consider paying off high-interest debt first or refinancing loans to free up cash flow.
✅ Example: If your gross monthly income is $12,000, your total debt payments should not exceed $4,320.
📌 Learn how to transition from debt reduction to wealth accumulation.
Power Dollars: Are You Making Your Money Work for You?
🚀 Which Phase? Accumulation Phase – Once debt is under control, Power Dollars should go toward wealth-building.
Once your basic expenses are covered, the next question is: How much of your income is actually working for you?
Power Dollars are the funds you should be directing toward debt reduction, investing, and wealth-building.
Formula:
GMI × 5% = Minimum Power Dollars
GMI × 10% = Ideal Power Dollars
➡ If you’re in debt: Use these dollars for aggressive payoff strategies.
➡ If you’re debt-free: These should go into investments and retirement savings.
➡ Long-term goal: Increase this percentage to 10-20% once debt is eliminated to build serious wealth.
✅ Example: If you make $10,000 per month, you should be putting at least $500 to $1,000 toward wealth-building.
📌 Not sure if you’re investing enough? Let’s create a wealth-building strategy for you.
For Those in the Strategic Income Phase (Retirement Planning)
💰 Which Phase? Strategic Income Phase – Ensuring your investments last is key to long-term security.
If you’re investing and building long-term wealth, withdrawal rate becomes a key factor in ensuring your money lasts.
Formula:
Total Withdrawals in the Past 12 Months ÷ Total Investment Balance
➡ Rule of Thumb: Withdrawal rate should be ≤ 4%
- 0-2% = Preservation Mode (Healthy and sustainable)
- 2-4% = Wealth Mode (Stable but needs monitoring)
- >4% = Critical Mode (Risk of depleting assets too quickly)
📌 Learn how to create a sustainable withdrawal strategy for retirement.
Next Steps: Let’s Build a Plan for Your Future
If you’re making a good income but still feel like you’re not getting ahead, it’s time to shift from paycheck-to-paycheck thinking to wealth-building strategy.
✅ Start by running these numbers on your own budget.
✅ Identify areas where you might be off track.
✅ Make small adjustments that create long-term financial impact.
A strong budget isn’t about restriction—it’s about intentionally directing your money toward the things that matter most.
📞 Let’s talk! Schedule a meeting with one of our financial planners today.
💡 “The plans of the diligent lead to profit as surely as haste leads to poverty.” – Proverbs 21:5
Disclosures & Important Notes
🔹 These financial ratios are general guidelines and should be adapted to fit your unique financial situation.
🔹 This article is for educational purposes only and does not constitute financial advice.
🔹 Consult with a qualified financial advisor to develop a personalized plan that aligns with your goals.
🚀 Ready to take the next step? Let’s create a financial strategy that puts you in control of your future. Contact Strategic Income Group today!
