Living on 70%. The 70/30 Rule

The 70/30 rule is possibly one of the fastest way to build wealth. It’s where you save 30% of your income and live off the other 70% with daily living expenses.

You’ve possibly heard of the 90/10 rule, where you live on 90% and save / invest the other 10%.

The issue with this approach is that the 90/10 Rule works best when you are young and just starting out earning money as time will allow your money to grow and you need less of a cash cushion. If you are serious about building wealth, I recommend the 70/30 rule as it is a phenomenal way to save your income. If you don’t save it, it will be burned up in smoke – “POOF”, like a perfect illusion. You will have almost no idea how your money did this disappearing act. The 70/30 rule is also best put in place when you are possibly almost debt free for maybe the exception of your mortgage.


By being frugal in your spending and employing the 70/30 rule, you once again pickup momentum. Why I recommend getting rid of all your miscellaneous debt is because you will have a lot less distractions with what to do with your income. You will take advantage of your new found wealth by saving rather than paying towards debt. That is a good feeling knowing that you are investing for yourself rather than big business e.t.c. It is a reward system that pays itself back in dividends. First, you should definitely invest this income safely. You then want to move some of this money into higher yielding financial vehicles like treasury bonds, housing (that will eventually go back up), maybe a growth index fund. You definitely want your investment diversified and not put into anything volatile like high yield stocks with a higher risk. Stocks like this can be invested in with other ‘play’ money that you build up other than your normal savings, but you must learn everything there is about stock investing.


For business owners, same issue goes for the 70/30 rule. Which is even easier for you. You may decide to invest back some of the 70% discretionary income back into your own business. Definitely, bank at least 10%-30% of your take home salary though. See your tax advisor for specific strategies in maximizing your tax benefits here.


When we employ the 70/30 rule, it’s a more frugal lifestyle, but will eventually lead to your life goal of being financially free and clear!

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  • Mariana

    My dream is to be able to live on the 10% and donate the 90% of my income … That is why I am working on creating passive income streams so I can achieve this dream

  • Ashley

    I heard this rule a few years back, and flipped it. I try to live off 40 and save 60. Works like a charm if you know where to pinch your $$ !!

  • Dwight Anthony

    Ashley, That’s just great. If more people in the world lived this way there would be alot less poverty and alot more wealth builders within the world. Most people tend to dwell in consumerism and need instant gratification. In any case, savers always tend to win in the end.