The 70/30 Rule.
There’s always a dilemma: Of what I earn, how much do I spend and how much do I save? If I spend it all, it’s not good; if I save it all, how will I live? The 70/30 rule solves the dilemma because you use 70% for your expenses and comfort, without remorse for spending it, use 10% for charity, 10% for building wealth, and 10% for investment – used as a seed. In reality, there is a difference between the financial market and investment. The financial market is for maintaining wealth, with chances of increasing it over time. Investment is what you use for an activity that can make the invested value return a greater value, such as commerce or the manufacture of a good. This part is the value that takes risks because we don’t know if the investment will prosper or not. The issue of saving should be treated with care because there are two mindsets: the scarcity mindset and the abundance mindset. The scarcity mindset is about saving a lot, cutting expenses on things you enjoy, to the point of showering with a soap that costs a tenth of the price of the soap you like, just to save money! The abundance mindset assumes that the world has plenty; if I want more, I will seek more! I will not consume less!