The 10% Solution

Million-Dollar Investment on a shoe-string

Ninety percent of the families in America are still living paycheck-to-paycheck, always finding too much month left over at the end of the money. Living paycheck-to-paycheck is a symptom – not a lack of income – that results from not having the skills needed to build and keep wealth. You begin to feel as if there is no level of income you cannot outspend.

It is true that without the discipline to take control of your financial future there is no level of income you cannot outspend. Budgeting is certainly not the answer. The only person I’ve ever known to make money with a budget is the one who created Budget Rent-A-Car. The two most difficult personal promises to keep are certainly budgeting and dieting. Neither produces any instant reward or positive feedback so necessary for continued motivation. Budgeting is a plan requiring self-sacrifice now for some vague reward sometime in the not-so-foreseeable future. Budgeting never worked for me and it probably doesn’t work any better for you. But there is a strategy I’ve discovered that allows you, without sacrifice, to build a guaranteed investment fortune for your future. I call it the 10% Solution.

Go from Paycheck to Prosperity

Beginning with your next paycheck, take 10% right off the top and send it to a mutual fund. Do the same with every paycheck for the rest of your life. Write yourself the first check each month before you pay the rent, mortgage, or car payment, or even buy the groceries. We were all taught to handle obligations backward: to pay everyone else first and then enjoy and invest what was left over. The problem? There is never anything left over. To get out of that rut and guarantee yourself some real wealth, always pay yourself first, even when, and especially when, there is not enough left over to pay everyone else. Don’t worry, they will still be there with their hands out next month.

Always pay yourself first. The less money you think you have, the more important the strategy. Make the 10% Solution a personal challenge. Do it now. Don’t wait for it to happen.

“What do you mean, take 10% out of my paycheck?” you may be thinking. “I’m already spending 120% of what I earn!” If you are, you won’t even miss the other 10%.

No one ever makes excuses for success. Excuses are only necessary when you forget or fail to do something. Excuses won’t build wealth; action will. All successful people have discovered the same success principle: “Do it now.”

Get 20% Attitude Money

Have you ever noticed how directly your attitude is related to your bank account balance? The smaller the balance, the more difficult it becomes to maintain a positive, winning attitude. A positive attitude and financial self-confidence are two of the most important wealth-building tools. The easiest method of maintaining the winning attitude that comes from cash in an account is never to be without it.

Using the 10% Solution, make deposits in your mutual fund account until the balance is equal to 20% of one year’s take-home pay. In writing, promise yourself you will never touch the money-not for overdue bills, emergencies, or any other logical reason. Why? As soon as the money goes, so does your attitude. You will find it far easier, attitude-wise, to have overdue bills with money available to pay them, if you wanted to, than to have your bills totally paid and be back in the paycheck-to-paycheck, empty-wallet rut.

You will always encounter tough months when the money goes out faster than it comes in. Your 20% is your attitude money, your dependable mental shelter during financial storms-never, never touch it no matter how tough it gets. Your more stable attitude will propel you past your short-term financial dilemmas.

Once you have reached the 20% quota, you won’t have to deposit another dime in the account. If your goal is to double your income every five years or so, your 20% account invested correctly also will double in the same amount of time. Open a separate account for your future 10% deposits.