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.
On The Money Guy Show, in an episode titled Everyday Investors Are Beating Fund Managers (Copy Their Strategy), Hanson lays out the rule with no wiggle room: “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.” His co-host Brian Preston frames the discipline this way: run every extra dollar “through the filter of trying to save and invest 25%” before deciding what to do with it.
The verdict: they are right, and the savings data proves why it matters
The advice is sound. The U.S. personal savings rate has slid from 6.2% in the first quarter of 2024 to 4% in the first quarter of 2026. Per capita disposable income has climbed from $63,638 to $68,617 over the same stretch. Americans are earning more and saving a smaller share of it. Overtime dollars are exactly the kind of income that gets absorbed into lifestyle rather than wealth.
Here is the mechanic. 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. Same overtime hours. Same paycheck. Two completely different outcomes, separated only by whether the money was filtered through the rule on arrival.
The 25% target is calibrated to give a typical earner a realistic shot at replacing income in retirement without requiring extreme frugality. It must apply to overtime because overtime income is real income. The IRS taxes it as such. Your future self spends it as such. Carving it out of the savings calculation is a story you tell yourself; the math treats every dollar the same.
The one exception, and the variable that changes the math
Hanson allows exactly one carve-out: working overtime “in this specific season for a specific purpose,” such as funding the next car or another defined short-term goal. Even then, you are still saving the overtime. You are just routing it to a near-term sinking fund instead of a retirement account. The dollars get assigned a job instead of drifting into lifestyle spending.
The variable that changes how aggressively you have to save your own dollars is the employer match. If you are single earning under $100,000, or married filing jointly under $200,000, the Money Guy framework lets you count your employer’s 401(k) match toward the 25% target. A 4% match on a $75,000 salary is $3,000 a year of credit against your goal. Above those income thresholds, the match no longer counts and the full 25% must come from your own contributions. Same rule, very different cash-flow requirement, depending entirely on where your household income lands.
Where those savings go is determined by what the show calls the Financial Order of Operations: cover the employer match first, knock out high-interest debt, build emergency reserves, max tax-advantaged accounts, and so on down the priority stack. Preston’s instruction on overtime specifically: “load up that money, that overtime, let it fulfill what’s going on with your army of dollar bills.”
What to do before your next overtime check clears
- Automate the split on payday. Set up a standing transfer that moves 25% of every gross paycheck, including overtime, into investment or savings accounts the moment direct deposit lands. Removing the decision removes the temptation.
- Check your income against the match threshold. If you are under $100,000 single or $200,000 married, your employer match counts toward 25%. If you are above, model your contribution rate without it.
- Assign every overtime stretch a purpose in advance. Either it funds long-term investing under the standard rule, or it funds a named short-term goal. Anything unassigned gets spent by default.
- Run your next dollar through the Financial Order of Operations. Match, then high-interest debt, then emergency fund, then tax-advantaged accounts. Overtime dollars follow the same priority stack as base-pay dollars.
Overtime is income arriving faster than usual, and the 25% rule is what keeps it from leaking into a lifestyle you cannot sustain when the extra shifts end.
Top Gaining Stocks
Top Losing Stocks