By Andrew Neitlich

A 40-10 rule for wealth and making a difference

By Andrew Neitlich

With the recent earthquake/tsunamis it is hard to write about anything meaningful about selling Web services, and for sure our prayers go out to anyone touched by this disaster.

The closest tangent that comes to mind — appropriate or not — is how we spend the money we make from our business. In business school, a bunch of students made a pledge to stick to the 50-40-10 rule, which goes something like this:

Whatever you earn:


– Do your best to live on half, even if it means living simply and not “keeping up with the Jones.” Keep your expenses low.

– Save 40% for the future: emergencies, education, retirement, etc.

– Give 10% away to those less fortunate or causes that help them out.

It takes discipline and a sense of gratitude to follow this rule, especially as we get older and our expectations tend to rise. But it is worth consideration, as it could make a meaningful difference to yourself, your family, and those in need.

Is anyone successfully following this guideline, or something close? Please share.

  • This is an important reminder during this holiday season and the time of new year’s resolutions. It reminds me of the tenets presented in the classic “The Richest Man in Babylon”.

  • Steve MacLellan

    Yes,… the Success Business College in my town filed for Chapter 11. Amazing isn’t it?

  • Sarah Lewis

    We live kind of close to that in my house. Here it’s more 50-30-20, with us living on about 50%, 30% going to savings and investments, and 20% going to worthy causes (10% is automatically tithe and the other 10% is discretionary but mandatory chartitable giving). We did this on the recommendation of our pastor when we were in college. It was a lot easier to start then, when we were making beans, than it would be to try and suddenly part with half of our income.

  • I just started earning my income so I will be doing something similar to this. :)

  • As a college student, mine is more like 90-10. 90 to my bills/living expenses/loan payments and 10 to my charity. Hopefully when i get a full time job in a few months i’ll be able to work on the 50,40,10.

  • I wish I could live by that rule as well, but for the moment I don’t even make enough to support myself :(

    Hopefully it’s something I will be able to do when I get out of college.

  • I have adopted a 60-30-10 rule. My wife and I earmark our money for tithe and have worked hard to spend it as such. It has been a very hard thing to do. When you see you have $100 left to spend on tithe, but no idea what to do with it (I know, laziness on my part), and you want to go out to dinner, it’s very easy to justify moving the tithe amount down to $50.

    However, I truly believe that as Americans (and others in industrialized nations!) have been blessed. Besides blessing other people, I’ve witnessed how my giving has impacted the lives of others and it has blessed me on a deep level. The 10% of my money I spend on others makes earning the other 90% to live worth it.

    A pat on the back to all who currently give and a word of encouragement to those who currently don’t. If you don’t now, doing so will bless you tremendously.

  • chairman

    what about taxes though.

  • Like chairman said before, a question I have always wondered is do you tithe before or after taxes?

  • For those of us who pay tithe in the strict sense, it is supposed to be “first fruits”… that is to say; you pay 10% of everything you earn, before taxes. Unfortunately, after a few rough months in 2003, I got out of the habit, but I’m working my way back into it.

    As for 40% savings… call me a procrastinator, but I’m young and I can always make more later. But for those in the countries affected by the tsunami, later might be too late so I hope all of us here at SitePoint can help make a difference for those people.

    On a side note… I never knew there were so many Christians here. Interesting.

  • tzd

    man, i need a job in which I could live off 50%… that dosent even cover rent, and by no means am i living lavishly…

  • Like others have said….I am no exception. I don’t even make enought to support my wife and it let alone be able to live on half of what me make together. It would be nice to be able to though.

  • andanne

    We split our kids’pocket money ($1 per week per year of age) into thirds. A third is for them to spend on themselves, a third is to be saved and a third is for giving. Giving includes presents for family and friends, donations, and church collection. We hope this approach will teach them a sense of generosity and prudence

  • There is no way I could meet that ratio. With rent, child support, utilities, ect… it’s just not possible. Sometimes I worry that I can’t even support myself. And I too am not living lavishly, there’s just not a lot of money for web designers in the area I live.

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