Are you looking to build wealth like the top 1% in the world or ultra-rich people. Here is a simple rule to follow that adapts to your income level, no matter how much you earn. This rule is called the 75/10/15 formula, which can help you manage money and build lasting wealth — whether you’re earning Rs 1 lakh or Rs 1 crore a year.
The beauty of this 75/10/15 rule is its flexibility. It’s a framework that works no matter what your salary looks like. The rule revolves around three key principles: spend, save and invest. Let’s break it down.
Spend no more than 75% of what you earn
The first part of the 75/10/15 rule is to spend a maximum of 75% of your income, not more than that. Your total spending covering all your living expenses should not exceed 75% of your earnings. Even better, if you manage to spend less.
If you start following the 75% rule, you will notice that you suddenly start making smarter choices with your money. You start looking for cheaper alternatives, without sacrificing quality. This 75% rule also helps you focus on value.
Remember that one peculiar quality rich people have is that they are mindful about their spending — even when they have the money to splurge, they always find ways to save.
So, if you’re able to keep your spending under 75% — say, you only spend 60% of your income — the remaining 15% is what you’ll focus on next.
Also read: What will be the value of Rs 1 crore in 20, 30 and 50 years from now after adjusting inflation?
Save 10% for a cushion fund
The second part in the 75/10/15 rule is to save at least 10% of your income for a “cushion fund.” This is essentially an emergency fund — money you set aside specifically for when life doesn’t go as planned. And by “emergencies,” we mean things like a medical crisis, a job loss, or even a natural disaster. You should never use this 10% fund saved for things like a spontaneous vacation or a weekend binge on fast food.
A good rule of thumb is to calculate your monthly expenses (everything — rent, utilities, groceries, entertainment) and multiply that by 5.
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