Recently we looked at this list of 15 things put together by John Rampton which may be holding you back from financial freedom. The list is :
- Living Above Your Means
- Lack Of Determination
- Neglecting your Health
- Purchasing a Home
- Relying on One Source Of Income
- Wasting Valuable Time
- Not Acting on Your Ideas
- Not Reading
- Fear and Negativity
- Not Setting Goals
- Avoiding Routine
- Not Collecting Assets
- Spending Time with Toxic People
- Failing to Follow to Allocate your finances (70/30 rule)
- Not Having A Mentor
That title doesn't really seem to make sense at first glance, and neither may the principles involved. The title means, not following rules which guide you to how you should apportion your money.
Earlier in this series, we looked at a structure on budgeting and allocating an 'ideal' amount of money into the right places. We have also looked at the principle of allocating your money (and time) in line with your priorities.
This is a quick easy concept to grasp, and focus on sharing your spare income between long term savings (investments), short term savings (cash accounts) and giving it away to charity. The final element is what throws some people, who may think 'hold on, to get more money, I need to give more away'. Of course, this should not be done at any level of detriment to yourself, but intentionally donating money (or your time) to charities brings about a certain well being, a mindful benefit to both yourself and the charities.
Personally, I am not a great enthusiast of setting up a direct debit to a charity and including it in our bills - that seems all too automated, and removes the intentional and mindful benefits of directly giving to a charity. There has to be a real benefit in your heart, otherwise it is just like paying a utility bill.
To put this concept into action :
Work towards 70% of your income being sufficient to cover bills and spending (as we outlined in this post earlier)
With the rest, put 10% into a long term investment, 10% into readily accessible savings, and 10% intentionally giving to charity.
If the 10% to a charity doesn't fit, try using some of your time - maybe a fundraising initiative for example. If that still isn't possible, find a way of helping those in need simply. An example of this, is someone I know who bought a box of hand-warmers (the things you scrunch up then they emit heat for 8 hours - like these ... Little Hotties When they are in cities, they always keep 4 pairs in their pockets, ready to distribute to homeless people - 2 pairs each - one pair for their hands and one pair for their feet. That makes all the difference to their suffering, especially in winter.
From the 30% spare, it is suggested to donate a third towards charity, a third towards investments and a third towards saving.