Does having more money mean having a better plan? Not necessarily. Money is often thought of as the answer to all the problems, but it might be not be the case when it goes in the hands of the wrong person. While more money might not mean having a better plan, a better plan might lead you to more money.
This is something that even ‘business philosopher’ Jim Rohn - entrepreneur and author of several books including ‘7 Strategies For Wealth & Happiness’ - has famously said. Rohn also introduced the 70/30 money rule in this book, which suggests that people should live 70% of their income while keep the remaining 30% for charity, investing, savings.
Rohn is widely recognised for sharing his philosophy of the rich versus the poor is this. He said, “The rich invest their money and spend what is left; the poor spend their money and invest what is left.” His famous advice on having more money relates to it.
Wealth wisdom: ‘I remember saying to my mentor, ‘If I had more money, I would have a better plan.’ He responded…’
Rohn was the person who often talked about financial freedom and how it isn’t about how much money one has, but how one allocates their money.
He once said, “I remember saying to my mentor, ‘If I had more money, I would have a better plan.’ He quickly responded, ‘I would suggest that if you had a better plan, you would have more money.’ You see, it’s not the amount that counts; it’s the plan that counts.”
Jim Rohn’s quote once again draws upon his 70/30 money rule, indicating that if planned well, one can gradually see their wealth go up. So, it is the plan that matters and not the amount of money.
Jim Rohn’s 70/30 money rule
In his book ‘7 Strategies for Wealth & Happiness’, Rohn recommended using the 70/30 rule for better management of money.
According to this rule, individuals should use 70% of their after-tax income for necessities and other stuff, while allocate the remaining 30% towards savings, wealth creation and charity.
Struggle to manage your salary? Use 70-20-10 smart budgeting rule
A slight extension of Jim Rohn’s 70/30 money rule, the 70-20-10 smart budgeting rule also offers a simple, straightforward framework to plan better. It divides your income into 3 brackets: 70% to be allocated towards necessary expenditures, 20% for savings and investments, while the remaining 10% for debt repayment or addressing any financial goals.
For example, if your monthly income is Rs 1 lakh, following the 70-20-10 rule, you should keep Rs 70,000 for regular and necessary expenses like rent, groceries, transport etc. Rs 20,000 would go towards your savings and investments including insurance and the last Rs 10,000 should go paying off any debts you have.
Just like 70-20-10, you can also use the 50-30-20 budgeting rule, which suggests keeping 50% of the income for needs, 30% for wants and the remaining 20% for savings and investments.
