It’s a fact that most of us got into this industry not just to help people and make money, but also to build wealth. But how do you go about doing it? A simple but effective strategy for getting there is through the 70/30 rule. Here’s how it works:

What is the 70/30 Rule for Realtors?

The 70/30 rule is a simple formula that can profoundly change the way you approach your personal finances and wealth building. Here’s how it works: Live on 70% of your post-tax income, and save the remaining 30%. That’s it!

This rule is based on a basic principle: savings equals wealth. It’s not about how much money you make—it’s about how much you keep and then invest. By saving 30% of your income, you start to build what I like to refer to as your “war chest.” This is your pool of capital that you can use to buy assets and grow your wealth. Over time, as you invest in assets that appreciate or generate passive income, that money works for you—even while you sleep.

The Power of Savings in Wealth Building

Many people mistakenly believe that generating wealth is all about earning high income. While making more money is definitely part of the equation, the real magic happens when you start saving your money and then investing it. Each dollar you save today is a dollar you can put to work tomorrow. Whether you’re investing in real estate, stocks, or other assets, this saved money is what will fuel your financial growth.

If you’ve been following along with our previous post on identifying your “enough number,” you’re already on the right path. Now, the next step is ensuring that your spending aligns with your wealth-building goals. When you can keep your lifestyle within that 70% threshold, you’ll be well-positioned to save and grow your assets.

How to Make the 70/30 Rule Work for You

If you’re currently not living on 70% or less of your post-tax income, it’s time to take a closer look at your spending. What can you cut back on to generate more savings each month? It’s not about sacrificing your quality of life—it’s about being intentional with your choices and identifying areas where you can be more frugal without compromising your happiness.

Here are a few tips to help you implement the 70/30 rule:

• Track your spending: The first step in knowing if you’re hitting the 70% mark is tracking your expenses. Use budgeting apps or spreadsheets to monitor where your money is going.
• Cut non-essential expenses: Are there subscriptions you’re not using? Or maybe you can find more affordable alternatives for certain services?
• Automate your savings: Set up automatic transfers to your savings account each month. This ensures that you are consistently putting away 30% without thinking about it.
• Focus on long-term goals: Remember, your goal is to build assets. Whether it’s real estate investments, a stock portfolio, or reinvesting in your business, think about how your savings can work for you in the long term.

The Outcome

The 70/30 rule isn’t just a financial principle; it’s a mindset shift. It’s about making deliberate choices to live beneath your means so you can invest in your future. If you’re able to commit to saving 30% of your post-tax income, you’ll have the capital to build wealth through assets that will grow over time.