10-20-70 Rule

Last week, I shared about the importance of charity and how it benefits both the giver and the receiver.  However, charity alone is not sufficient if you want to grow your wealth.  So today I will write about a guaranteed way to multiply your money.  It’s easy enough even for students on allowance, as long as they are disciplined.

But before I jump into it, let me ask you, do you want a  job with a better pay?  Are you thinking of asking a raise from your boss?  Do you want to have other sources of income?  (Oh come on, who doesn’t?)

Friends, top authors of personal finance books have one theme in common.  They all believed in this principle: Forget about asking for bigger salary or profit, if you don’t even know what’s the right thing to do once the money is in your hands.  Whether it’s Robert Kiyosaki or Anthony Robbins or Bo Sanchez or Adam Khoo or any other best selling authors in personal finance, they will tell you that increasing your inflow of money is only second priority.  The top priority is how do you manage the money that you already have.  If you can’t manage the money that you have now, what makes you think you can manage it when it grows bigger?

Matter of fact, getting a pay increase can do more harm than good if you are mismanaging your finances.  In short, the first step towards great wealth is not increasing your income (which is what most people do).  The first step is to properly manage what you already have.

So how do you know if you are managing your finances well?  Here’s what I believe.  If you spend over 70% of what you earn, you are not managing it well.

Now let me explain the 10-20-70 rule.  It simply means that at least 10% of what you earn should go to charity, at least 20% of what you earn should go to investment, and your expenses should not exceed 70%.  Do notice that this rule emphasizes on charity and investment first, your expenses last.  Do not spend first then save what’s left for charity and investment.  Save for charity and investment first, then spend what’s left.

For those of you who spend 70% or less of your income, give yourself a pat in the back.  Just donate at least 10% to charity and invest at least 20%.  Great wealth is coming your way.

For those of you who think you are not earning enough to live on 70% of your income, you need to understand this.  The problem is not the lack of money (although that’s what it appears to be on the surface).  The true underlying problem is that your lifestyle or your spending habits has simply gotten ahead of the 70% threshold.  And you became used to that lifestyle.

I remember when I first moved to Singapore.  I complained about my salary being not enough, or that the commission  scheme is too low, or that the bonus should be higher.  I moved to a different company that pays much better and I was happy earning much more.  But guess what happened after several months, I found myself complaining again.  The more money I receive, the higher my lifestyle and my spending habits elevate.  And so I moved again.  You get the picture.  I learned that no matter where I moved, it will not solve the problem.  Because the problem is not the lack of money, the problem is what do I do with the money.

Thank goodness I have learned the 10-20-70 principle.  It has impacted me positively both in my finances and in my outlook in life.  And I’m sharing it to you now.  It’s your turn to grow in abundance.

Have a great life,

Dan Mark See

[Regular topics here include success, investment, health, charity, positivity, faith, winning, abundance, knowledge, taking actions, personal growth, character development.  Please feel free to click “follow”, “like”, and “share”]




  1. Anne

    I have my own family now but still sending my 2 siblings to college and providing money to my family back at home – can thaty be considererd as charity?

    • danmarksee

      Thanks for bringing up a good question, Anne. I guess everyone has their own definition of charity, and mine simply means helping those who are really in need, those who cannot help themselves (abandoned babies, elderly, young orphans, handicapped, etc.). If your parents are senior citizens, I guess you can consider sending them money as charity (or half-charity, half-obligation). If your parents are only in their 40s, refuse to find a job, and simply depend on you for the sake of convenience, then I don’t take it as charity. Same thing with your siblings in college. Did they try to go for scholarship? Did they consider part-time jobs? If they are helping themselves but simply needed a little bit more assistance from you, then I can consider that charity. But if they are not even helping themselves, or if they are dropping subjects left and right, or if you have been taken for granted, I don’t think it fits my definition of charity. But then again, I guess everyone has their own definition. Hope this helps.

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