The 10, 10, 10 and 70 Formula
As I searched for a way to recover from my financial disaster, I came across Jim Rohn’s suggestion of 70, 10, 10, and 10 formula. The formula was also mentioned in the book The Richest Man in Babylon by George Classon. I will simply rearrange it to 10, 10, 10 and 70 formula to suit the principles I will follow. Here’s how it goes:
THE FIRST TEN – FOR CHURCH AND CHARITY
The first 10 means that I will set aside 10% of all my earnings for church and charity. This portion is set aside to be used for my offerings, to give back from the blessings I received. It would be easier to give with a cheerful heart if I will set aside in advance this amount. Once I receive my salary, regardless of the amount, this portion will be set aside. Some part of this allocation, I use for charity to share to the less fortunate.
THE SECOND TEN: ACTIVE CAPITAL
The next 10 means that I will set aside 10% will be for active capital, for a business that will allow me to earn extra income. In the meantime, I will use this portion to build my emergency fund. I have to build at least the equivalent of three months of salary.
THE THIRD TEN: PASSIVE CAPITAL
The other 10 means that I will set aside 10% of all my earnings for building a source of passive income like stocks and mutual funds. In the meantime, I use this portion to pay back my debts.
THE FOURTH PART (70): LIFESTYLE:
The remaining 70% of all I earn, I will use this portion to support our lifestyle. This portion is for paying the rent for a warm shelter, buy clothes to wear, buy food to eat, for pleasure and enjoyment, and other things for our daily living. My family must live upon this portion. We should never use more than this portion.
I will make this a habit, every time I receive my salary, I will separate at once the amount for the 10, 10 and 10. Whatever left will be the amount we can only spend. This is like paying myself first before paying others. Following this habit, I will never run out of money. I will be able to pay off all my debts and build a good amount of surplus funds for myself and my family.
INCREASE YOUR INCOME
Now that you are able to live with that allocation, you have to find ways to increase your income doing part time business. For me, I do online marketing business during my free time.
The good thing for me having an extra source of income is that all the earnings will be added to my passive investments after taking out the 10% for the Church & Charity allocation. However small, it’s an extra income that I can put to work. And what if I’d be able to earn P1M a year from that extra source of income? That means, I can attain my financial freedom a lot faster using many sources of income.
More ideas how I am doing my recovery were written in my blueprint: On The Way To Financial Recovery.
If you need coaching on how you can apply this formula with your finances, just leave a comment below and I will contact you. You can also join my FB Coaching group: Pinoy Millionaire Academy.
Here’s to your success!