The 50/30/20 Midlife Millionaire Budgeting Strategy

Hello, and welcome back to blog post number nine! The blog is back after a short one-post break, as I started a new position as a Tax Recovery Analyst Intern at RBC for this summer! However, Nolan's Investment Notion will now return back to regular biweekly Wednesday posts! Now, for today's post we will be discussing another budgeting strategy, very similar to my first post; The 20/40/40 Young Millionaire Budgeting Strategy. This new strategy, titled The 50/30/20 Midlife Millionaire Strategy, attempts to capture a more mature and realistic strategy for people who are at a later stage in life, or have more responsibilities and are unable to follow the rigid 20/20/40 strategy. In this post, I hope to be able to effectively communicate to you what the 50/30/20 strategy is, how it works, why it works, and how you can implement it into your daily lives to start building wealth smarter!

First of all, I am sure many of you have heard of a 50/30/20 budgeting strategy before, But the "Midlife Millionaire" version has one very key component that differs from the widely accepted and known version of this strategy. The key differentiating factor with my strategy, is that the traditional 50/30/20 includes wants, in the 30%. This leaves 50% for needs, 30% for wants, and 20% for savings... bogus. If you want financial freedom badly enough, we're gonna have to tighten things up around here. In the Midlife Millionaire version, the 30% goes towards savings investments, and the 20% goes towards active investments. So, instead of expending 80% of your income and only retaining 20%, it is a 50/50 here, and if you still got some things you really want you're going to have to fit them into the 50% for needs. The reality is this strategy is very realistic, much more realistic than the 20/40/40, however the majority of people are just not willing to make the sacrifices required to meet these numbers. Similar to the 20/20/40 strategy components, the 30% "savings investment" goes towards things like income dividend strategies, HISA (high-interest savings accounts), long-term growth stocks, GICs, basically anything that you plan on not touching for at least 1 year. On the other hand, the 20% that is "active investments" is for things such as day trading (maybe options... see post number six), swing trading stocks, business startups/operations, basically anything that you plan on touching within the year, and typically carries more risk than the savings portion.

I want to run through a quick and simple example with you know to show you why and how this strategy works. This may be surprising (as it was to me), but the average Canadian salary in 2025 is $78,000 Canadian Dollars before tax, which is pulled from figures posted by Statistics Canada (Salary Calculator Canada, 2025). In Ontario specifically, it is $81,000, which then leaves you with around $60,000 after tax income. So, if we stick to this strategy, that leaves us with expending $30,000 for needs and wants, $18,000 for savings investments, and $12,000 for active investments. Back in my first blog post, I walked through an example to show the immense power of good ol' compounding, which I would like to do again, but this time better. You see, that previous example was good to show the power of a one time lump-sum investment, and what it can do over time; but, this time I want us to start at $100,000 and show you the power of compounding annuities, which is the process of not only compounding the original investment, but also the consistent regular payments added to the investment year over year.

In case you want to play around with the immense power of sticking to a budget strategy and consistently investing cash flows overtime, here is the formula to find the future value of standard annuities.

We start with $100,000 which is ONLY from our savings investment portion (30%), which is assuming we have been sticking to this budgeting strategy for just over 5 years, at an average annual salary after tax in Ontario. Let's say we find an investment opportunity which will yield us an 8% annual return, which is very doable and realistic. You're 30 years old and have built up this savings through my 50/30/20 budgeting strategy since around 25, and you are now planning on launching this investment, while ALSO investing the $18,000 annually into the same investment over the next 20 years, until you are 50 years old. Using the formula for future value of compounding annuities, by the time you are 50 years old you will have turned that $100,000 savings, into just shy of ... (drumroll) $1,520,000. I would also like to point out that this calculation is assuming that you are staying at the same average salary until you are 50 years old, while it is dependent on your line of work, is still very unlikely that your pay will not increase at all within that time, allowing you to invest more as well. So, that is it for this weeks post, a quick updated version of the budgeting strategy, for people at a point in life where the 20/40/40 is just too far out of reach now. I hope you all enjoyed and learned something, as well as take this strategy into consideration for your future financial planning. As always, thank you all very much for reading, and I will talk to you all in the next post!

Nolan Kushnir.

Citations

SalaryAfterTax. (2025, May 8). Salary Calculator Canada - salary after tax. salaryaftertax.com. https://salaryaftertax.com/ca/salary-calculator