Personal Improvement

The Wealth Wheel: Four Essential Pillars of Personal Finance

Updated on March 22, 2020 Updated on March 22, 2020
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Wealth wheel: income, debt, budget, invest
Table of Contents  
  1. Show Notes

Introducing the LMM’s Wealth Wheel.  Do we debate the age-old question, what matters more, size or the motion of the ocean?

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The wealth wheel contains four segments that are connected clockwise.

The first is income. Simple enough, the amount of money coming in. This could be your salary, your side hustles, or your lottery winnings (not really that last one).

The next segment is debt. How much money you owe whether that is credit card debt, a personal loan, or student loans.

The third segment is budget. Your plan that allocates where your money is going. A good rule of thumb is 50% to essentials, housing, food, utilities etc, 20% to investing, and the last 30% for non-essentials, things like beer money, vacation funds, clothing, concerts. There is room for individual interpretation in this formula but it’s a good starting guide.

The fourth and final segment is investing. This can include your 401K, Roth IRA, your brokerage account, etc.

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All four parts of the wheel are equally important. Some of you will have a lock on one or more of the segments. Maybe you have no debt but you also have no investment.

Your money won’t grow. You have a budget but haven’t paid off all of your debt. You’re driving and going in the right direction, but you have your foot on the brake and it’s slowing you down.

There are many layers to each segment. Use our site to dig deeper into the segment that you need a better handle on until all four of your segments are rolling smooth. We’ve done multiple episodes on each aspect of the wheel.

As the female member of the team, let me assure the male hosts and listeners, just as all the segments of the wealth wheel are equally important, so too are the size and the motion of the ocean. Glad I could settle that for all the gentlemen.

Show Notes

The LMM Wealth Wheel: Lean about the four parts of the Wealth Wheel. The 50/20/30 rule.

Candice Elliott - Senior Editor
Candice Elliott is a substantial contributor to Listen Money Matters. She has been a personal finance writer since 2013 and has written extensively on student loan debt, investing, and credit. She has successfully navigated these areas in her own life and knows how to help others do the same. Candice has answered thousands of questions from the LMM community and spent countless hours doing research for hundreds of personal finance articles. She happily calls New Orleans, Louisiana home-the most fun city in the world.

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