Select Page

Here is an exciting thought! Why not work full time on your job and part time on your fortune? And what a feeling you’ll have when you can honestly say, “I’m working to become wealthy. I’m not just working to pay my bills.” When you have a wealth plan, you’ll be so motivated that you’ll have a hard time going to bed at night.

So if you will indulge me, I would like to share a simple formula for creating wealth. Here’s my thought on how money should be allocated.

Related: 5 Money Principles You Need to Know

The 70/30 Rule

After you pay your fair share of taxes, learn to live on 70 percent of your after-tax income. These are the necessities and luxuries you spend money on. Then, it’s important to look at how you allocate your remaining 30 percent. Let’s allocate it in the following ways:

Charity

Of the 30 percent not spent, one-third should go to charity. Charity is the act of giving back to the community and helping those who need assistance. I believe that contributing 10 percent of your after-tax income is a good amount to strive for.

The act of giving should be taught early, when the amounts are small. It’s pretty easy to take a dime out of a dollar. But it’s considerably harder to give away a $100,000 out of $1 million. You say, “Oh, if I had $1 million, I’d have no trouble giving $100,000.” I’m not so sure. $100,000 is a lot of money. Start early so you’ll develop the habit before the big money comes your way.

Capital Investment

With the next 10 percent of your after-tax income, you’re going to create wealth. This is money you’ll use to buy, fix, manufacture or sell. The key is to engage in commerce, even if only on a part-time basis.

So how do you go about creating wealth? There are lots of ways. Let your imagination roam. Take a close look at those skills you developed at work or through your hobbies; you may be able to convert these into a profitable enterprise.

In addition, you can also learn to buy a product at wholesale and sell it for retail. Or you can purchase a piece of property and improve it. Use this 10 percent to purchase your equipment, products or equity—and get started. There is no telling what genius is inside you waiting to be awakened by the spark of opportunity.

Savings

The last 10 percent should be put in savings. I consider this to be one of the most exciting parts of your wealth plan because it can offer you peace of mind by preparing you for the “winters” of life. Let me give you the definition of “rich” and “poor”: Poor people spend their money and save what’s left. Rich people save their money and spend what’s left.

Twenty years ago, two people each earned a $1,000 a month and they each earned the same increases over the years. One had the philosophy of spending money and saving what’s left; the other had the philosophy of saving first and spending what’s left. Today, if you knew both, you’d call one poor and the other wealthy.

So, remember that giving, investing and saving, like any form of discipline, has a subtle effect. At the end of the day, the week, the month, the results are hardly noticeable. But let five years lapse and the differences become pronounced. At the end of 10 years, the differences are dramatic.

And it all starts with the same amount of money—just a different philosophy.

Related: 7 Tips for Developing Your Personal Philosophy

Photo by @alinabuzunova/Twenty20.com

3 Ways to Turn Nothing Into Something
3 Ways to Turn Nothing into Something

To turn nothing into something, you’ve got to start with ideas...

seasons of life
Are You Using the Seasons of Life?

One of the difficulties we face in our industrialized age is...

goals
The Real Value in Setting Goals

What goals did you set at the start of this year?...

Don’t Wait Until Tomorrow

Time offers opportunity but demands a sense of urgency.

4 Powerful Little Words That Make Life Worthwhile
4 Powerful Little Words That Make Life Worthwhile

In this excerpt from a 2001 presentation by Jim Rohn, the...

Why Successful Habits Breed Success
Why Successful Habits Breed Success

When you are doing all that you can possibly do, and...

15 of Jim Rohn’s Most Motivational Quotes

For more than 40 years, Jim Rohn honed his craft like...

finding hope in tragedy
Finding Hope in Tragedy

I am struck by something that seems to be ever-present and...

The Powerful Combination of Words and Emotion
The Powerful Combination of Words and Emotion

Well-chosen words mixed with measured emotions is the basis of affecting...

how to deal with negative influences
How to Deal With the Negative Influences in Your Life

If you were to evaluate the major influences in your life...

master the art of communication
8 Ways to Master the Art of Communication

The better you become at using these tools, the better you’ll...

The 4 Building Blocks of Good Communication
The 4 Building Blocks of Good Communication

Effective communication is a critical component of mastering success. By mastering...

How to Lead in 2021

To truly inspire others, invite them along on your personal journey....

leader
How Do You Want People to See You as a Leader?

For a leader, honesty and integrity are absolutely the keys to...

leader
The Biggest Challenge You’ll Face as a Leader

Once you’ve set a goal for yourself as a leader—whether it’s...

good character
6 Essential Traits of Good Character

Success as a leader is built on the foundation of character....

How You’re Killing Your Productivity
How You’re Killing Your Productivity

Productivity is essential to our feeling of self-esteem, accomplishment, and hopefulness....

5 Tips for Using Your Time Wisely
5 Tips for Using Your Time Wisely

Run the day or it will run you.

Being Successful Is a Personal Choice

The epitome of success is giving a design to your life...

How to Start a New Discipline

Success starts by becoming the master over the small details of...