HomeFinancialThe 70/30 Rule in Finance: About Managing and Investing Money

The 70/30 Rule in Finance: About Managing and Investing Money

Reading time:  5  minutes

The idea of properly managing, managing and investing money is to make it work for now in the present, but also the future.

There are many formulas and methods available in all kinds of variations, but here we give an example of a simple method for building wealth: in particular where and how you can best handle money according to this principle of the 70/30 rule. assign.

How is the classification in the 70/30 rule?

The basis is your monthly net income, according to the 70/30 rule the following classification is generally used:

  • 70% is for monthly expenses (anything money is spent on)
  • 10% goes to savings unless you have debts to settle. In that case, this percentage of your income will first go to resolving debts so that they are resolved as quickly as possible.
  • 10% goes to investments, retirement, saving for later, education of children
  • 10% goes to donations, charities

70% in expenses according to the 70/30 rule

Expenses include EVERYTHING you spend money on, including (but not limited to): bills, utilities, emergency or unexpected expenses, shopping, food, you name it. If you spend money on it, it is considered an expense. It also includes your loans, if you have any, such as the car lease or home mortgage.

Tips to make this work include:

  • 70% or less is the real foundation to stick to. If you don't have to live off 70%, then definitely don't! The less you spend, the more you can save and invest = the better life will be for your family afterward. 70% is the maximum of your income that you can spend.
  • First you need to know what you are currently spending. Keep track of every cent you have spent in the past 3 months (yes, you read that right) and put it in a spreadsheet or use an app like Buddy for this. Any expense, even if it is only € 0.50 cents. This is important to map out absolutely the entire spending pattern for yourself.
  • Categorize the expenses when you track them in the spreadsheet or app, so you can see at a glance what you are spending your money on (groceries, eating out, clothes, bills, furnishings, etc).
  • Determine the total of all expenses (for the past 3 months) and divide this by 3, so that you determine a realistic average per month.
  • Don't have a credit card or bank statement because you pay a lot of cash? This means that you do not have an accurate overview of all your expenses, so start by keeping track of every cent you spend over the next 3 months.

70/30 rule: how do you use the other 30%?

After your taxes are paid and you have your net income left over, learn to live by the 70/30 rule of living on 70 percent of your after-tax income.

Then it is important to see how you use your remaining 30 percent:

Charity, Donations and Charities

Of the 30 percent that is not spent, a third must go to charity in some form or another. Overall, the approach is that contributing 10 percent of your after-tax income is a good amount to aim for. Start this habit early so it is second nature before the big sums of money come your way!

Investment of capital

With the next 10 percent of your after-tax income, you will create wealth. This is money that you use to buy, repair, manufacture or sell. The key is to trade, even if only on a part-time basis.

So how do you go about creating wealth? There are many ways. Let your imagination run wild. Take a good look at the skills you have developed at work or through your hobbies; you may be able to turn it into a profitable business.

In addition, you can also learn to buy a product wholesale and sell it to retailers. Or you can buy a piece of real estate, improve it and sell it again or rent it out.

Use this 10 percent to buy your equipment, products or stocks - and get started. There's no telling in advance what genius is inside you waiting to be awakened by the spark of these opportunities!


The last 10 percent must be saved. Financially poorer people spend their money and save what is left. Richer people in a financial sense save their money and spend what is left.

It's important to get used to having money in your bank account and then not being tempted to spend it.

Twenty years ago, two people each made $ 1,000 a month, and they each made the same increases over the years. One had the philosophy of spending money and saving what's left; the other had the philosophy of first saving and spending what is left. If you knew them both, today you would call one poor and the other rich.

Follow the 70/30 rule and build up power following the example of Jim Rohn (fig.)
Follow the 70/30 rule and build up power following the example of Jim Rohn (fig.)

So remember that give, invest and save, like any discipline, has a very subtle effect. At the end of the day, the week, the month, the results are barely noticeable. But let five years pass and the differences become clear. After 10 years, the differences are dramatic.

And it all starts with the same amount - just a whole different thought and philosophy.

Sources ao KalkineMedia (link), PersonalFinance (link), RichTodo (link), Success (link), TheBalance (link)


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