Important Money Rule 101: 10 Percent of All You Earn is Yours to Keep!

I remember the days when I was living paycheck to paycheck, ponding off electronics just to have a little money in my pocket, relaying on my parents to pay my half of the rent and car note. I remember losing my job and being so broke that I took money out of my retirement account only after 1 year of working in my career just to make ends meet. I know on first hand, how it feels to be broke and feeling like it’s impossible to get ahead.

Something had to give. I was afraid that if I continued to live like this, I would end up overworked and over stressed (and I was already that) until old age.

I was financial illiterate. Where do I start? How do I begin to reverse this curse (that’s what it honestly felt like) I was living in? After years of hard financial lessons and reading books and testing information out, things begin to shift for me when my mindset changed. Most important lessons I’ve learned is that being rich starts in the mind, it’s a mind set and it does not matter how much money you make, it’s what you do with the money that matters.

I am no financial expert. I am still learning more about money. But I do want to share with you the little that I do know and what helped/helps me out. First important money rule, believe you can achieve financial freedom even when your reality may say otherwise.

I had to climb and claw my way out of the pile of debt I was in. I had to look at it as a challenge, a game! It’s probably best if you have this mindset regarding your debt to help keep your worries and anxieties low. I eventually paid off $55,000 of debt. I am currently debt free until I start using good debt to make investments. (I will blog about it, so stay connected and subscribe here!)

So to keep this blog post simple and straight to the point: 10 percent of all you earn is yours to keep. This is the first step I used in tackling my debt and I still use this rule to this present day.

Let’s break that statement down:

When you receive a paycheck, 10% of that paycheck is yours to keep. If the paycheck is $1500: what’s 10% of $1500? (and do not panic I am not expecting you to be good at math, you can download a percentage calculator on your phone or google it to keep things simple until you get the hang of it)

$150 is 10% of $1500

So you will keep $150 and use the remaining $1,350 to pay bills, get your hair done, etc. I suggest creating a separate bank account – 10% account for this. So you can watch you money pile up, just from saving 10%. OR jobs sometimes allow you to take out a percentage on your check to send to your savings or to another bank account. If you are a business owner: take 10% of what you pay yourself daily or weekly.

What’s next? Nothing! Watch the money pile up. Set goals for the account. Once you reach your goal amount, you can pay off debt or invest it. OR you can use the money to jump start your emergency fund account. Never allow your 10% account to reach $0, you want to always ALWAYS keep extra money stashed. Another tip: keep quiet about your money, never allow anyone to know how much money is in your accounts or how much you have stashed away unless its for educational purposes only!

Emergency Fund Account - an account used strictly for unexpected events that happens in our life. Ex: Car repairs, bail money, lawyer fees, funeral expenses, health conditions, unexpected expenses for kids & pets, etc.

* Even when you start an emergency fund account, still keep your 10% account open, as they will be used for different things!

“DeeDee Blu how can I worry about saving money when I’m in debt or behind on bills?” I never said it was going to be easy, you just have to do it. Just remember the sacrifice is worth the reward. It will take discipline, but it will begin to teach you not to spend all of your money, it will teach you that we really do not have to live off of all of our income. The beginning may be rough and as the account grows you will be tempted to touch it and use it for leisure. I recommend withdrawing money out of your 10% account only to invest it or pay off debt. Likewise, only withdraw money from your emergency fund account only for emergencies.

Saving 10% of your earnings is the beginning stage of paying off debt and becoming financially in tuned. Because you will now become mindful of how and what you spend your money on. You will begin to cut down on unnecessary spending. You will start paying attention to how much money you make biweekly or monthly. You will begin to tell your money what to do and where to go! You will have full charge over your finances and its a wonderful feeling.

As your account grows, you will see how easy it is to save money and you will be proud of yourself.

Save your 10% first, not after your pay bills! Save it first or you will NOT save it!

“Any man who will put by one-tenth of his earnings consistently and invest it wisely will surely create a valuable estate that will provide an income for him in the future and further guarantee safety for his family in case the gods call him to the world of darkness. This law always sayeth that gold cometh gladly to such man. I can truly certify this in my own life. The more gold I accumulate, the more readily it comes to me and in increased quantities. The gold which I save earns more, even as yours will, and its earnings earn more, and this is working out of the First Law” – excerpt from The Richest Man in Babylon: The World’s Favorite Inspirational Guide to Managing Wealth by George S. Clason

Summary:

• Save 10% of all you earn
• Save the 10% first before spending your money
• Create a separate account for your 10%
• Only use the money for investments or paying off debt
• Create a separate account for emergency funds
• Do not allow either accounts to hit $0 – $5 is better than $0
• Be consistent!
• Have fun! If you can save more than 10% have at it!

You got this! You can do it! If I can do it, you can too! I’m just a regular girl, who did not come from a strong financial background. I was financial illiterate and used to be afraid of looking at my bank account after a weekend of spending. I decided I did not want to be in debt any longer. I started googling, reading, and applying what I would learn. I just knew it had to be a better way. There’s light at the end of the tunnel, but not without sacrifice, faith, and doing the work!

Do not forget to subscribe! I will unfold my story in my blog posts on how I climbed my way out of debt. I am not a financial expert, however I will tell you what worked for me.