The 30% Rule (and 7 More Wealth Strategies to Think Like a Millionaire)
The 30% rule of finance is simple, but before we breakdown what it entails let’s make an important note that 30% is just a symbolic figure. The more or less financial freedom each person has can determine how much they want that figure to shift or change for them. Regardless, the essential principle of fund allocation embedded in this rule stays the same and must remain constant. Okay, let’s carry on!
The 30% rule of finance dictates that a portion of ones resources should be allocated into three major channels before spending the remainder on personal expenses. The first 10% should go to benefaction (this is what those in religious circles would call tithes), it involves giving back to the community through a gift or donation, to those in need who are unable to pay you back. The second 10% should go towards self investment, this involves putting money aside for direct investments towards your self development and improving your skill base. It goes towards making yourself invaluable in your field of expertise. The third 10% should go towards public investment, this entails finding the right asset channels to invest in or putting money aside in a pool of funds until you can aggregate enough capital in the long term to invest with professionals or in an identified asset (or business channel).
You see, just as we said at the beginning of this post, the 30% rule is simple and it is important to note that the “30%” figure is symbolic to dividing a portion of your income or earnings into three different channels before spending the rest on personal expenses. The percentage on amount for each person could differ and range from as low as 5% per allocation to as high as 50% en masse, depending on each persons level of financial freedom or size of income.
Keep reading to get to the bonus material we’ve included in this post highlighting 7 more wealth strategies that can redefine your financial success and help you identify why you may have been flopping that money bag!
Key Takeaways from the 3 Major Principles of the 30% Rule:
• Benefaction principle: Give back to your community.
• Self investment principle: Invest in your self development.
• Public investment principle: Look for assets to invest in that can earn you a passive stream of income.
Let's dive into the wealth strategies as promised. Major rules to remember:
Seven Major Rules of Personal Finance You Must Never Break
Always pay your essential bills first before repaying debts, providing support to others or spending on luxuries. Your essential bills are your day to day expenses you have to pay to keep everything running smoothly. These bills can include your rent, electricity, transportation, groceries etc. Always treat your “needs” before your “wants” until you can afford to spend as much as you like on your “wants” without straining your bank account.
Prioritize financial growth over immediate debt repayment. If you have debts, try to engage in negotiations with your creditors to establish a feasible debt (re)payment plan that aligns with your financial goals, you might be surprised at the outcome. By doing that, you can ensure that you maintain a positive cash flow while addressing your debts. Seize unique financial opportunities where you can earn a healthy profit as they arise, according to your risk appetite. Remember, being financially prepared and proactive can lead to favorable outcomes, as fortune often favors those who are ready to seize opportunities. Still, pay off your debts as soon as you can and aim to remain debt-free in the future.
When engaging in acts of charity, consider giving directly to those you aim to assist rather than relying on religious organizations as intermediaries. Taking a hands-on approach ensures your aid reaches its intended recipients efficiently and effectively. Remember, personal responsibility in benefaction is key to getting the desired impact, as accountability ultimately rests with you.
Never withhold money when spending on health-related expenses, as neglecting your well-being can lead to significant consequences. Remember that health is a vital component of a fulfilling life, and investing in it is crucial. The adage "where there is life, there is hope" and "where there is a will, there is always a way" comes to mind, they remind us of the importance of prioritizing ones well being and the value of being resolute when it comes to addressing these expenses.
Learn to politely decline financial requests that do not align with your financial goals or budget, without feeling guilty. Recognize that your financial resources should be allocated in a manner that supports your long-term plans. When faced with such demands, communicate your financial priorities respectfully or simply decline, without feeling obligated to comply. By setting clear boundaries and staying committed to your financial objectives, you can maintain control over your resources. Remember, saying "no" does not equal being unkind and anyone who cannot understand that is not worth your time.
Put aside a portion of your budget towards personal development and self-improvement. Consider it as an investment in your mind, as it has the potential to yield immeasurable significant returns in various aspects of your life. Prioritizing self-development ensures that you remain an invaluable asset in your personal and professional endeavors. By continuously learning and growing, you can enhance your skills, broaden your perspectives, and increase your potential for success.
When making financial decisions, prioritize long-term solutions and investments over short-term gains. Adopting a patient approach in wealth building can lead to more sustainable and profitable outcomes in the long run. The saying "patience always wins" should always be at the forefront of your mind when you think of sustainable wealth. By focusing on long-term objectives, you can build a solid financial foundation that supports your future goals and aspirations. While short-term investments may offer immediate returns which may be good sometimes to meet immediate needs, they often lack the stability and growth potential of long-term strategies.
Okay, there you have it! We hope you can adopt these strategies for wealth creation and financial success going forward if you haven’t already. Let us know in the comment section if you have any questions on personal finance or any wealth related subjects you would like us to cover. Jisie ike!
Key Takeaways from the 7 Wealth Strategies:
• Prioritize paying your essential bills first before repaying debts.
• Prioritize financial growth over immediate debt repayment and strive to pay off your debts systematically.
• Consider giving directly to those you aim to assist rather than relying solely on religious organizations as intermediaries.
• Prioritize your health and never withhold money when spending on health-related expenses
• Politely decline financial requests that do not align with your financial planning.
• Always put aside some money for your personal development and self-improvement.
• Prioritize long-term solutions and investments over taking shortcut.
