Budgeting (ND1)
Earned Income Rules Based System: Set your ND1 spending controls
Last updated
Earned Income Rules Based System: Set your ND1 spending controls
Last updated
© 2016-2023 WealthBuilder.io. All Rights Reserved. A division of Call To Freedom.
Money should be managed via ratios (relative values) not dollars and cents (absolute values). Wealth is created through production not consumption. ND1 is the first formula in our non discretionary rules based system. It is how we manage our Earned Income (money we work for: ie; wages, tips, salary, commissions, bonuses, 1099 income) to begin the process of mastering our money.
Wealth is created through production not consumption. Money is always looking for a place to go, flowing from dumb to smart or where its treated best. We become its master by giving it purpose and reason for existence and not letting money with different purposes co-mingle.
We do this by setting up 4 separate accounts and applying the following ND1 rules to every deposit (of Earned Income).
Rule: Live off of 70% of your income.
Our system uses the following ratios which have been proven across time to create and sustain true wealth.
10% giving account - to help those in need
10% wealth account (20% when debt free) - to develop Unearned Income (managed via ND2)
10% debt account - to accelerate debt payoff
70% living expenses - to cover bills
You are free to customize the above ratios but that is the proven and recommended formula. You can also add custom accounts as well.
Open new accounts, close unneeded ones, consolidate what can be consolidated.
Label the accounts at your bank, brokerage or fintech solution.
Schedule automated transfers according to the ratios above to trigger every time you make a deposit.
How to apply ND1 to variable income. If you have variable income from a job or business, you can identify the baseline (low range) income amount over a period of time and setup your ND1 ratios and automated transfers accordingly. Then every month or quarter, identify the difference between the baseline trend and the higher spiked payment periods - whatever that difference is apply ND1 ratios via manual transfers. Test until you figure out a system that works best but the key is setting up a non discretionary system, sticking to it and applying it consistently.
