The 10-10-10-70 Principle (Part Four)

The 30% (3 x 10%), we have touched on so far, is that portion of our income we otherwise refer to as Seed, or Freedom Fund. It is our license for getting out of the rat-race. It is our secret weapon for gaining ascendancy over money. The remaining 70% is the portion of our income we base all our discretionary expenditure on. This is no license for going to town and blowing it all away, though. I believe you are wiser than that.

Even though we call the 70% discretionary expenditure it is not without boundaries. At least, that is assuming you want to live a fruitful and worthwhile life. Which, I know everyone reading this wants. The way a person spends shows the person’s values and priorities, irrespective of what the person thinks or says. Hence, it is up to each one to ensure alignment between what is perceived and reality.

What are YOUR VALUES and PRIORITIES in life? This is in no way to restrict you. Rather, it is to say, “TO THYSELF BE TRUE.” Don’t follow the proverbial “Joneses” (whatever that might mean in your peculiar circumstance). Our life priorities and values determine the buckets that make their way into our “Spending Plan” (otherwise known as a budget). The same principle of time management applies here. Not every seeming emergency is important.

We need to ensure our money is allocated around our priorities and not the other way around. We budget our priorities, not prioritize our budget. Our priorities might be occasioned by our needs (i.e. existing commitments or obligations) and/or our long and short-term goals. Things that might be occasioned by need include allocations for feeding, bills, transportation, offering, house upkeep, parents' upkeep, pocket money, school fees, rent, etc. These are known as recurrent expenditures.

Things that might be occasioned by our goals include children future school/college fees, vacation plans, etc. There is a need to differentiate between the things that need immediate attention and those that can be deferred. Those needing immediate attention might need to be fully allocated for at each budgeting (spending planning) point/cycle. Those that can be deferred can be spread over a defined time period. That helps reduce the impact on each plan/cycle while ensuring availability when needed.

The important things here include the following: The fact that you are in control of your money, and not the reverse. You are making your money do what you want. You are making your money work for you in achieving your short and long-term goals. You have a plan for your money. And, you are responsible for/in its usage.

Let me close by emphasizing, 10%s (Seed/Freedom Fund) represents minimum allocations. That is to say, one can choose to increase the allocations, depending on one’s goals. On the other hand, 70% (Discretionary Expenditure) represents a maximum allocation. That is, all expenditure needs to be equal to, or less than what it represents.

To quote Harvey Mackay, “When a person with money meets a person with experience, the person with the experience winds up with the money and the person with the money winds up with the experience." May no con take your money. Invest in your financial education. Thomas Tusser puts it this way, “A fool and his money are soon parted.” A corollary of this will be, "A wise man and his money are soon united." May wisdom avail for you, as you achieve your God-ordained goals. I see you on the other side and you look glorious. You are made to reign in life. May you reign over your finances.

© 2017 Akin Akinbodunse

Links to Series:

The 10-10-10-70 Principle (Part Three)

Links to Related Articles:

Real Wealth
Money Makes Me Happy

Stay in Control of Your Money

Links to Other Resources:

Smarter, Faster, Better (Charles Duhigg)

The Master Key to Riches (Napoleon Hill)

SaveSaveSaveSaveSaveSaveSaveSave