By Bigg Success Staff
Bigg on Money
Financial planners for years have said that we should set aside ten percent of everything we make.
Richard Jenkins, editor-in-chief of MSN Money and author of A simpler way to save: the 60% solution, has another outstanding idea:
Spend 60% of all you make!
We know what you’re thinking – you just went from getting to spend 90 percent to only getting to spend 60 percent!
But you haven’t heard the rest of the story, as Paul Harvey would say.
Piggy Bank #1 – This little piggy stays home.
This piggy bank gets sixty percent of your GROSS income. You’ll use it to buy the basics – things like food, clothing, household expenses, taxes, insurance, donations, and the like.
Piggy Bank #2 – This little piggy goes to the market.
This piggy bank gets ten percent of your gross income to invest in long-term assets, like the stock market. Most likely, your vehicle will be a tax-advantaged account, like a 401(k) through your employer.
Piggy Bank #3 – This little piggy gets the beef.
Set aside ten percent in this piggy bank to beef up your long-term savings even more. You’ll also invest this in long-term assets, but you’ll want to maintain enough liquidity so the money is available for an extreme emergency.
Piggy Bank #4 – This little piggy gets none.
The ten percent that goes into this account is for irregular expenses. So you won’t get any long-term benefit from this piggy bank. What you will get is the ability to pay for large expenses upfront instead of with a credit card. So from this account, you’ll pay for your vacations, major repairs, replacement of appliances, gifts and the like.
Piggy Bank #5 – This little piggy cries “Wee, wee, wee” all the way home!
This ten percent is your fun money. It’s your reward for setting aside the money in the other piggy banks the way you planned to. Think about it this way –
If you meet your goals, you get to spend an extra ten percent!
Now isn’t that a better way to look at it?