Have you ever looked at what you make every year and then look at your savings and wonder where it all went? This used to happen to me all the time. Then finally I wrote it all down and was shocked where it was going. At that point, I learned a great principle that turned me from the road to broke onto the road to financial freedom. It was very simple, really, once I made the decision to take the road to success.
The principle is the 80-10-10 – give 10%, save 10% and spend 80%. Simple right? So why isn’t everyone doing it? One reason is because they are like me and have never heard of it. A main reason is choice – you have to decide to do it. Here are the 4 steps you need to take in order to achieve financial success and every step is vital.
Step 1 – Service – You have to work for your money. There is no money tree or a money fairy. You have to work and in most cases, the harder you work, the more you will make especially when you work to serve others. The most successful businesses are those that put customers first. This doesn’t mean you give everyone everything that they want. It means you respect people and are kind in all situations. You also try to find the balance between what is good for the customer and good for the business. By the way, if you are an employee, you are also a business owner – the business of you. Rabbi Lapin talks a lot about this in “Thou Shall Prosper” – a book I highly recommend.
Step 2 – Share – You have to share your money in order to be successful. This doesn’t mean just handing it over to any and everyone. But you need to have a giving heart. You need to realize there are people less fortunate than you, no matter what your financial situation, and help them out. Some of my happiest moments are when I am giving to others. You also need to give more than just your money – give your time as well. Give in the way that is personal to you, but make sure you are giving something. It will make a bigger difference than you realize.
Step 3 – Save – This is mandatory to have any kind of money when you need it. If you spend everything you have (and more), how will you ever have extra when something goes wrong or when it is time for you to retire? In the formula above, the savings part is just 10%. That is all it takes and if it is invested well, it will grow without you doing anything else over time. If you think you can’t save, start somewhere, even $10/paycheck. Over time you will see how freeing it is when you have the money to cover an emergency and that will motivate you to do more.
Step 4 – Spend – You have to spend as well. Of course there are your needs – shelter, food, clothing. But if you have financial success, you can also have your wants as well – cell phones, cable, vacations, eating out, etc. We all should be able to live on 80% of what we bring home. But many of us haven’t set up our lifestyle to do so. This means it will take a little time, but the 80-10-10 rule will bring you financial success every time. And it is never too late to start.