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The 10% Savings Rule

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If you've read the Weathy Barber by David Chilton or The Weathy Barber returns by David Chilton you've probably heard of the 10% Savings Rule, if you haven't read either of those books, I highly recommend reading them both ASAP, they are both amazing books on teaching people how to invest and save money by doing little things that add up.

If you haven't read the books, the 10% rule is just a simple investment guideline that is outlined to help save money while not effecting your lifestyle. The basic principle and idea behind it is to plan to invest 10% of your salary/income into savings for your future. (This is not the only thing that these books teach, however it is a very important lesson). One little tip from us is for the 10% rule, invest 10% of your gross income (not net income). Just in case you aren't familiar with these terms, gross income means your salary/income before any deductions such as taxes, etc. So if you make $1000 per pay check and after tax and other deductions you make $800, your gross income for that pay check would be $1000 and your net income for that pay check would be $800. If we stick with the same numbers, if you were to invest 10% of your gross income per pay check ($1000), it would be $100.

The idea is you want to put this money away and invest it for the long term, likely your retirement or possibly for the down payment of a house. Due to this you want to ensure that you will be collecting some interest on it, which means just putting this into a regular bank account will not cut it. We recommend speaking to your bank about the options available to you, they will find the best investment for your current situation and goals. Remember everyone is different, person A's financial goals and situation are going to be very different than person B's. Regardless of this, still strive to put money away for savings, your future self will thank you!

If you start putting away 10% of your gross income when you first enter the work force, you will likely have more than enough money to retire off of when it comes time. Also keep in mind if you start doing this right away, you won't even notice that you don't have the money to spend (which is a good thing).

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