In the previous post, you reviewed and categorized your expenditures and determined how much you spend on average, monthly.  Now it’s time to determine what your maximum spending should look like based on the 70% goal.

  • For the sake of example, let’s say your monthly take-home pay is $3,000 per month, meaning you see that dollar amount actually deposited into your account monthly
  • Find 70% of that take-home pay: 70% x $3,000 = $2,100
  • Everything you spend money on in a month should amount to $2,100 or less.

70% or less! The less you spend, the more you save.

Compare your actual expenses average to your 70% goal

Are you over 70%? Don’t panic. This is an opportunity for improvement and growth!  See a real-time budget improvement by making a copy of the original spreadsheet that you made (see previous post to see what I’m talking about), and actually deleting the expenses that need to go.  The time has come to trim the fat!

The first place to begin, as you have probably guessed, is in the category of “Not Essential…at all.” It is very important for you to be aware of your temptation to spend unnecessarily. Begin deleting those expenses entirely and committing to the fact that you will not make the same mistakes in the year to come.

The next place to visit is the category of “Essential to Quality of Life.” I am a firm believer that it is important to have a high quality of life; however, for the sake of attaining your goals, it may be wise in the short-term to rein the expenditures in a bit. That doesn’t mean you can never participate in social functions, or ever go out to eat again (unless you’re super hardcore), but it will be a good challenge to be cognizant of the areas you could improve and save. And, of course, the final area to review is the category of “Essential to Survival” to see if there’s any room for improvement (i.e. setting a lower grocery budget, or cutting back on other bills).

To learn about the rest of the 70-20-10 plan, be sure to check out the next post.  As always, if you have any questions, please reach out any time, or comment below!