The 70/10/10/10 Rule for Increase

If you read last week’s blog post, it may have left you wondering if entrepreneurs ever get to have any fun. After all, if you invest ALL OF YOUR PROFITS into your business, when do you get to enjoy the “fruits of your labor?” Whatever happened to “work hard, play hard” or better yet, “to the victor goes the spoils”? After spending most of my previous post analyzing the negative aspects of Parkinson’s Law and admonishing you to make sure you don’t overspend your profits or raises, this week I am going to encourage you to BLOW YOUR MONEY! Well, at least a little bit of it. There is nothing that will drain your excitement, creativity, and enthusiasm for your business than an attitude of all work and no play. It is imperative that you take some time (& money) for yourself.

Numerous studies have proven that employee productivity skyrockets after taking a vacation, which more than makes up for any lost time while the employee was away. (Do you really think that your boss gives you vacation time out of the kindness of their heart? This is Corporate America, baby! It’s all about the bottom line). This emphasis placed on rest & rejuvenation in many major corporations should teach us something about how we handle our own schedules as small business owners & entrepreneurs. Therefore, I want to give you a good rule of thumb to apply to any increase in your profits (for entrepreneurs), wage raises, or even seasonal or monthly sales bonuses. It’s called the 70/10/10/10 rule, and it will ensure that you keep your eye on the prize (financial independence) while not allowing yourself to get burned out, used up, and teetering on the edge of a nervous breakdown. This concept is not new, and I certainly didn’t invent it, but it’s an extremely effective way of handling your increase, so as to ensure your future success and prosperity.

The first 10% - Tithe It! As Christians, we understand the importance of giving your first fruits to God by tithing to your local church. There is a great deal of personal fulfillment that comes from being a cheerful and generous giver.

The second 10% - Blow it! – This is your chance to have a little fun. Go out to the nicest restaurant in town, take a weekend getaway to the beach, or get a full body massage. You deserve a reward for your hard work, and this will serve as a motivator to keep the profits rolling in. (Make sure and check out the video below for some more “Blow It” advice!)

The third 10% - Save it! I don’t want you to bury too much of your money because it won’t get you much in the way of a return (see the parable of the talents), however we all need a safety net, especially in these uncertain economic times. You eventually want to have about 6-12 months living expenses in liquid form, preferably in a money market account. Once you achieve that goal, you may decide to take this 10% and add to your investments or to your charitable giving (NOT MORE MASSAGES!)

The final 70% - Invest it! If you are an entrepreneur, look at testing and implementing some new marketing ideas. If the increase in profits is expected to be sustainable, perhaps you could look at hiring another employee. This would allow you to delegate more menial tasks, while leaving you to focus on more important decisions regarding the vision and direction of your company. As an employee, you should take your 70% and begin saving it as seed money for the launch of your own business. If you are into real estate, you could save it as a down payment for a rental property, or even buy a stock in a company you believe strongly in. The important thing is that you are taking the majority of your increase and sowing it into the financial realm, rather than into depreciating material assets that never satisfy.

“In the house of the wise are stores of choice food & oil, but a foolish man devours all he has.” Proverbs 21:20, NIV For more insight on this principle, check out this clip from one of my recent economic empowerment conferences…