The 75% Rule: A Financial Fortress - 2021-06-02

Imagine a life where financial security wasn't a distant dream, but a solid foundation. I recently encountered a fascinating concept, championed by figures like an NBA player, that boils down to a simple yet powerful rule: save 75% of your income. The remaining 25%? That's your playground – cars, dream homes, helping loved ones, whatever your heart desires. 

This rule acts as a powerful brake, preventing the reckless squandering of hard-earned money, especially for those whose peak earning years are fleeting. It's a safeguard against the "live fast, die broke" mentality that plagues many. Conversely, it also prevents the opposite extreme: hoarding every penny and denying yourself life's necessary joys. It's a balanced approach. Furthermore, it serves as a crucial training ground for the inevitable day when your steady paycheck vanishes. If you're accustomed to living within a strict budget, the transition to a fixed income will be far less jarring. 

The pitfalls of ignoring such a rule are starkly illustrated by the story of an actor. He poured over S$300k (and that's just the documented school fees!) into his daughter's overseas education, initially for a degree, which morphed into a master's. Despite his financial strain, he succumbed to his daughter's insistence. Now, she struggles to find employment, and he's left wondering about his own retirement. Had he adhered to the 75% rule, this predicament might have been avoided. He doesn’t expect repayment, and whether his daughter will support his retirement. His biggest wish is to stay healthy and not be a burden to his daughter. 

As responsible adults, we must avoid placing undue financial burdens on our parents, unless they are genuinely capable and we face dire circumstances. Living within our means is paramount. While 75% might seem daunting, especially for those with lower incomes, the principle remains: prioritize saving. Perhaps a more realistic target is 50% or 60%. But regardless of the specific number, the core message is clear: resist the temptation to squander more than 25% of your income on luxuries and unnecessary indulgences. Build your financial fortress, brick by careful brick.

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