"“If you're a part-time worker and you're only working half the time, it's 25% of the gross income. If you're an overtime worker, working overtime, we want you to be saving 25% of the gross income.”"
"“run every extra dollar 'through the filter of trying to save and invest 25%' before deciding what to do with it."
"“The paycheck hits fatter after overtime, and the mental accounting starts immediately. That extra $37.41 an hour, plus the time-and-a-half premium, gets reclassified as 'found money.' A nicer dinner. A weekend trip. The new tires you have been putting off. The base salary funds the life; the overtime funds the upgrades. That mental split is the mistake Bo Hanson wants you to stop making.”"
"“Imagine a worker earning $30 an hour, picking up eight overtime hours a week at $45. That adds $360 of gross pay per week, or roughly $1,440 a month. Treating it as bonus money means it disappears into consumption. Applying the 25% rule means $360 a month gets routed straight to investing before any of it is spent. Invested monthly at a 7% real return over 20 years, that single discipline compounds to roughly $187,000.”"
Overtime pay often gets mentally reclassified as “found money,” leading to spending on dinners, trips, and upgrades instead of saving. A rule is proposed for part-time and overtime workers: save 25% of gross income, including overtime, with no exceptions. The discipline is framed as running every extra dollar through a filter that targets 25% saving and investing before deciding how to use it. U.S. savings rates have declined while disposable income has risen, suggesting more earnings are being absorbed by consumption. A worked example shows that treating overtime as bonus money can reduce investing, while applying the 25% rule routes overtime into monthly investing and can compound to a large retirement value over 20 years.
Read at 24/7 Wall St.
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