The 10% rule

If you want to create financial freedom you will have to learn to make money work for you. In other words invest money in things that make you earn money instead of losing it.

The 10% rule is based on a percentage of your gross income that you set aside to invest in something that will make you money. This could be a retirement investment account, stocks, bonds or real estate to name a few.

'Saving 10% of my gross income per month? Impossible!'

Now you might say that saving 10% of your gross income at the beginning of the month is impossible. But: you start living according to what you have. Often when you earn more, your expenses also increase. Why? Because you now have more room to treat yourself to luxury items, nice meals out or expensive holidays. Because you think you deserve it after a lean period. How often have you bought yourself something to make you happy? Even though it wasn't really necessary? How often have you taken out a consumer credit to buy that slightly nicer TV? How often have you taken out a loan for a car, for example? Be honest with yourself when you answer these questions!

How much money have you spent in the past on things that leave you with nothing to show for?

And it also works the other way around: if you earn less, you also find a way to cope with that.

Be more aware of your money

Think about what you spend per month on credit cards, interest on credit cards, loans and consumer credit. I think you will be shocked at what this costs you per month! All together this is just that 10% that you could invest so that your money works for you instead of your money costing you money.

In your mind, money in your account is money you can spend. Subconsciously, you make choices about your spending based on the amount in your account. So if you put 10% away in another account to invest, you will base your spending pattern on the amount that remains.

You must also be strong-willed enough to never touch that 10% and, so to speak, forget that the money is in that account.

Ultimately, this money will create your financial freedom.

And if 10% is too much, start with a lower percentage that fits your income and expenditure pattern. It starts with awareness and taking action!

Would you like more tips on how to deal with your money more consciously?

Then also read the post 'The latte factor'.

Did you like this article? Do you have any questions? Leave a like or comment below. And share this article with your friends using the social media buttons!