Have you heard of the 70-20-10 principle of budgeting? To be successful in overcoming present and future financial trouble, an individual must learn how to rule his money. At the moment he must be able to manage his wealth as well as to prepare for the coming years. In order to be successful in dealing his finances, the 70-20-10 principle can be applied with ease.
Life is like a vapor in the wind. You can be strong today but tomorrow you are weak. Truly, when you wake up in the morning, you can’t tell if you can reach the evening. If you sleep at night, you can not claim that you can open your eyes in the morning, for many have taken sleep and never have awaken. While life is too short, there’s also only a span of time for a person to be durable enough to work and save while the source is flowing.
I heard about the 70-20-10 rule several years ago. It is very effective in navigating our finances to avoid financial distress. I believe that the 70-20-10 principle when applied is better than nothing. It will bring forth financial freedom to a family.
How to apply the 70-20-10? Let’s start with the 70% first.
70% – This percentage will be spent on a naive lifestyle. You get your living expenses (rent, food, clothing, children’s allowances, gasoline, load, electric bills, internet connection, etc…) from this amount and live without overspending for the month. Be firm to stay within the limit. This may not be easy in the first month of application but you will be happy when you spent within the parameter. Before doing this, you have to talk to your husband or wife so that he / she will understand about the simple lifestyle you are entering to. Some call this also as revolving fund.
20% – All of us want to improve our net worth. In other words we want to get rich for the glory of God. The 20% should go to savings or investments. We can place the 10% for retirement, 10% for emergencies (medical expenses or car repairs). You can also break it like below:
—10% retirement or get investment with life insurance
— 5% emergencies
— 5% If you want to have new computer, smartphones, and car, then you can separate this amount. 5% can also be set aside for your upcoming vacation.
10% – As a Christian, the 10 percent is called a tithe. I just can’t imagine myself forgetting my God whom I owe all the things and money that I have received. Giving the 10% back to God would be the greatest investment that a man can ever do and it is the wisest because of the return. According to the bible, the ROI would be “so much blessing that there will not be room enough to store it”.
“Bring the whole tithe into the storehouse that there may be food in my house. ‘Test me in this,’ says the LORD Almighty, ‘and see if I will not throw open the floodgates of heaven and pour out so much blessing that there will not be room enough to store it’” (Malachi 3:10).
What about offering?
I will not leave this question unanswered for I didn’t cover in the 70-20-10. You can extract the offering from the 70 or 20 percent or both. Certainly, the offering is not the 10 percent.
“Each of you should give what you have decided in your heart to give, not reluctantly or under compulsion, for God loves a cheerful giver,” (2 Corinthians 9:7).