27 February, 2012

It's Easy in Percentages

Budgets are a common way to work out how much money you want to save but have you ever considered using percentages instead?

Let me explain.

I first started thinking about money in terms of percentages as I started paying more attention to the power tithing. Sure it's a concept that appears really early in the Bible, Leviticus 27:30 to be exact (thanks for the help on that one google). When we hit the book of Numbers chapter 18, the Bible starts to talk about percentages and tithing by a percentage, a tenth (10%) to be made as an offering to the Lord. 

A tenth is easy enough to work out - God being God, it's also ingenious! A tenth means that it doesn't matter how much we make we can always give ten percent. 
  • When you're a kid and your pocket money is $1.00 - 10% is 10c
  • As a student you earn $140.00 a week at your part time job - 10% is $14.00
  • And so it goes on... no matter how high or low the numbers go.
When we're calculating how much money to offer to the Lord working out 10% seems easy. Even our government calculates our taxes on percentages. Yet, using a saving plan based on percentages baffles many people. Hopefully this will help explain it to you. 

Amiriche's Percentage Savings Plan
Your income either per week, fortnight, month is our starting point - 100%.
Your bills and everyday expenditure you want to convert into a percentage of your income. If it is an annual bill and your 100% is based on your monthly income then divide the bill by 12 and convert to a percentage - easy.
For example I spend per month 11.9% on transportation; car, petrol, public transport costs.
Once you have converted your bills into manageable percentages, simple deduct your percentage expenses from your income 100%. The figure you are left with is the percentage you have available to save.

What percentage of that 100% do you have left for saving? 0.2%, 12%, 34%?

Increasing your saving is always a good idea - you never know when you'll want to start a business or buy a car, lust after an uber expensive pair of shoes or cope of speeding fine! 

Whatever the percentage is that your saving start thinking about all your expenses as a percentage of your income (your 100%). It doesn't take long to which the way you look at your money. 

As you start to think about your money in terms of a percentage of your income you'll start to you want to increase the percentage your saving. And you'll find ways!

Today I bought a new winter jacket (it's really nice) which cost me just under 10% of my fortnightly salary but to me, I think it'll be worth the 10%. My phone bill, on the other hand costs me at just over 5% of my fortnightly salary... yeh I'm already looking for a cheaper phone plan.

Start thinking differently about your money. 
It'll pay off.


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