“It’s not the amount that counts, it’s the plan that counts” – Jim Rohn.
Recently, an email caught my eye from one of my many subscriptions. The title read something like the 70×10 rule of money. Any time rule precedes the subject, I am immediately intrigued because it should be evergreen.
No matter how much money you have, the status of your career, or whatever the like, the rule should apply to you.
In the video, Jim Rohn discusses his rule for money. He begins writing on a whiteboard 70-10-10-10 with blank spaces to the right. He explains that these are ideal percentages for your money to be distributed.
It goes as follows:
70% of your income goes to essentials like paying the bills, living expenses, and overall lifestyle. It makes sense the majority of your income is used for life. Rent or mortgage payments are probably a majority of that percentage.
10% of your income goes to charity. This charitable donation is anything from church to nonprofits to giving family members some extra cash. Any time you give when you are not forced to give that can be considered charity.
10% of your income goes to active capital like a business or ventures where you rely actively on this capital. At some point, you may start a hobby that accrues interest and potential buyers. I see plenty of these individuals at a weekly farmer’s market. They are spending their income on active capital trying to earn a few extra bucks on the weekend.
10% of your income goes to passive capital such as investments where your money can sit and accrue interest. This route is a more standard route for investing extra money. You find a financial advisor who recommends some funds to place your money in and let it sit for 3-5 years earning money.
Rohn goes on to explain that this ideal mixture of capital may not be your current positioning. You may currently spend 100% of your income on bills and lifestyle leaving zero percent for the rest of the categories. His personal position allows him to spend about 30% of his income on lifestyle allowing for a greater percentage elsewhere.
I started to think about how this principle correlates to project management and a project manager’s allocation of time. How do project managers spend their time? I am going to break down this ideal money distribution in terms of time for a project manager.
Christopher Cook, PMP, MSPM, has an extensive career in the construction industry. Throughout his career, he has been awarded over 40 construction projects that have yielded a 10% profit for each organization. He has a Bachelor’s of Science in Industrial Technology Management with an emphasis on Building Construction Management and Master’s of Science in Project Management. To find out more about him visit EntrePMeur. Christopher writes about strategy and cost management.