10% Rule of Money
Pay yourself first
Saving money is the most common and essential aspect of personal finance and management; despite of essentiality of savings many of us don’t even bother to have a glance at our financial status. We find it very difficult to save especially when its liquidity is high; to have a strong resistance to being reckless with your savings, the 10% rule comes into play.
This rule is not something that is taught by financial advisers and it’s nothing new but a useful approach to managing your finances.
In this rule, you are going to first isolate the 10% of your salary or your total income if you are a business owner. Then that ten percent is going straight to the various investment instruments; the things which are going to earn you some extra penny in the future.
Out of the remaining 90% of your income, you manage your expenses and even save some bit of money from it. Your remaining salary is available for expense and savings but the dedicated 10% is straight going to different kinds of investment.
That investment could be anything that either earns you extra money or increases your capability or efficiency in earnings. It could be:
- Stocks
- Mutual funds
- Gold bonds
- Physical gold
- Finance course
- Any certificate course in your field
- Real estate
- Cryptocurrency
- Vehicles
- Other instruments
This investment will generate money and will provide you with time and resources that you can use to either be more efficient or to simply buy leisure and a luxurious life. Instead of following pay yourself first which is particularly focused just on savings you are primarily investing then you save money from the remaining amount.
This is not the only ideal approach for financial planning and management but it’s better than mindlessly saving your money. When you focus on increasing your earnings and efficiency of earning then fulfilling your financial needs and goals will become a lot more easier.
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