75/10/15 Rule: A Formula For Creating Wealth At Any Income Level

Do you wish to accumulate money like the ultra-rich? The 75/10/15 rule is a straightforward, flexible framework in which anyone, regardless of their level of income Rs 1 lakh or even Rs 1 crore, can create wealth by dividing income into three key areas: one for consumption, one for saving, and the third for investing. Flexibility is the primary beauty of the 75/10/15 rule. It does not matter how much you can earn. This rule is absolutely applicable to every level of income. Now, let's break down how this system can transform your financial habits and set you on the path to wealth creation.

Spend a Maximum of 75 Per Cent of Your Income

The first part of the rule has to do with controlling your spending. Pay no more than 75 per cent of your income on living expenses, like rent, utilities, groceries, entertainment, and so forth. In this way, you leave room for savings and investments, two pillars of wealth-building.

The 75 per cent rule encourages mindful spending. Necessarily, you would come to view value over extravagance, finding alternative things that would not cut back on quality but on the pocket. For instance, you might consider more cost-effective products and services without compromising your lifestyle.

The ultra-rich are known for having disciplined spending. However, even with so much money available, they focus on value and often save, which is an attitude you can adopt to allocate resources better.

If you spend less than 75 per cent of your income, say 60 per cent, the extra funds go towards boosting savings or investments and accelerate the journey to financial independence.

Save 10 Per Cent for Emergency

The next step is saving at least 10 per cent of your income for a cushion fund, also known as an emergency fund. This money would serve as a safety net during unexpected events such as medical emergencies, losing your job, or natural calamities.

To calculate the ideal cushion fund, multiply your monthly expenses by five. For instance, if your monthly expenses are Rs 1 lakh, aim to save Rs 5 lakh. This reserve ensures that you’re prepared for financial shocks without needing to dip into your investments or take on debt.

Once you’ve determined your target cushion fund, decide where to keep it. While traditional savings accounts are a common choice, high-yield options like Fixed Deposits (FDs) or low-risk mutual funds can help your money grow faster.

Remember, though, that this is a cushion fund and should only be used in absolute emergencies. Do not use it for discretionary expenses like vacations or non-essential purchases. Once you have the recommended amount saved (five months' worth of expenses), you can stop putting money into this fund and focus on investing.

Invest 15 Per Cent for the Future

The final piece of the 75/10/15 rule is where the wealth-building really takes place, invest at least 15 per cent of your income. Wealth-building should not rely on getting a higher salary; it should be done in creating assets that will generate income and go up in value over time.

Investments can be in the form of stocks, mutual funds, real estate, or even some entrepreneurial ventures. The sooner you begin, the higher the capital you shall be able to benefit from compounding. This principle makes your investments grow exponentially over time, where meagre contributions blossom into significant amounts of wealth.

Ultra-rich people will build assets rather than earn money. According to Robert Kiyosaki's book, Rich Dad Poor Dad, it is not about how much money you earn; it is about the ownership of income-generating assets. For instance, a job that pays well will never make you rich because your earnings are directly proportional to your labor hours. Creating permanent financial security comes from investments and property assets.

You could begin small. Go on exploring mutual funds through a SIP, which means you invest a fixed amount of money at regular intervals. As your exposure grows, so can your knowledge. When you believe you are good enough, only then can you expand your portfolio to other asset classes as well.

Roadmap to Financial Freedom

The 75/10/15 rule is more than just a way to budget; it's the route to financial freedom. If you limit your spending, secure safety nets, and keep invested, you'll find yourself building the habits of the ultra-rich and setting yourself up to succeed in the long term.

This framework is malleable enough to fit your income and lifestyle. Whether you're just starting your career or already earning well, these principles will help you make smarter financial decisions, build resilience, and create wealth over time.

Ultimately, wealth isn't about how much you make; it's about how effectively you manage what you have. Start applying the 75/10/15 rule today and watch your financial future transform.