3 Portion Rule

While I have always had a strong personal budget, there have always been 2 things I have had a hard time figuring out in my budget. That is; how much money should go to my retirement fund, and how much should go to the church or charity. I know the Bible says 10% goes to the church, but for many people especially those that never learned to budget, it is not possible to start giving at 10%. It takes time to reach that level of giving. So when you don’t have enough money to give 10% what are you supposed to do? As I am always looking to learn about managing money I came across the 3 portion rule. It’s not an exact science, but I think it is a good place to start. And not only is it a great idea, it can work for anyone to give you starting points for a retirement fund and charity regardless of if you are an employee, business owner, or investor. If you apply this, your tithing may start at less than 10%, but over time it should become more then 10% of your personal income. The purpose of the 3 portion rule is to give you a starting point, and it also adjusts as your budget changes. Here is how it works; After all of your monthly bills are paid, the money you have left “also known as your monthly positive cash flow” should be split into 3 equal portions; 1/3 goes to your retirement fund. From the moment you first start to make money this money should be put away never to be touched in your life unless you retire. 1/3 goes to you for your personal savings, spend money, and investment. This is your personal money to manage for your needs and also to risk in investment. 1/3 goes to charity. If you want to give, this amount will show you what you can afford to give, this could be more than 10% of your income or less than 10% depending on your personal monthly positive cash flow. In the long run if you learn to manage your money this amount should become more than 10% of your total income. This is a very strong money management tool, if you’re giving allowance to your kids, start the 3 portion rule from the very start. Since we get virtually no education in school on managing our money, this is one of the greatest gifts you can give to a kid to get ahead in their life. If you want to make it more enjoyable for your kids, let them pick a charity for their tithe money, most churches will buy Christmas gifts for poor families, or help feed families in need, there are lots of charities to choose from, even if you’re not religious. Let your kids experience what it means to give.