The Only Financial Rule of Thumb You’ll Ever Need

Perhaps you are someone who makes a significant income each year or maybe you don’t, either way, chances are the money isn’t in the banana stand for you.

If you’ve never seen Arrested Development do yourself a favor and watch season 1 ASAP, but most likely, most of your money is actually in your housing, transportation, and food allocations each month.

Now you might be saying, “Yeah, duh..,” but just bear with me.

In my article on creating more financial awareness, the top priority I stress for everyone regardless of where they’re at in life is to always view money as a percentage.

Viewing money at a percentage is the only financial rule of thumb you will ever need, here is what I mean…

Money is a percentage game.

percentage rule of thumb

If the quarterback can complete 65% (PERCENT) of their passes and the hitter can hit 300 (30 PERCENT) they can have long prosperous careers that generate millions.

BUT if they dip down and only start completing 55% of their passes or hitting just 23% of the pitches they see, the chances of even seeing the field are greatly diminished.

In other words, completing just 10 fewer passes or hitting 7 fewer balls out of 100 are the separators to making millions.

The emphasis is on the percentage because it is the great equalizer and truth be told, your finances are no different. Grasping money in terms of percentage instead of numerically is the only financial rule of thumb you will ever need to follow.

Percentage… the best financial rule of thumb ever!

Personally, I didn’t really grasp the “Money as a percentage” concept until I read Grant Sabatier’s book Financial Freedom – A Proven Path to All the Money You Will Ever Need, in the spring of 2019.

I had actually heard a very wealthy individual say one time that the best advice he got when he was young was to never let your annual mortgage payments exceed 25% of your monthly take home.

At the time I had no clue really what the individual meant by that, but after reading Financial Freedom, I began to understand the true meaning of viewing money by percent – not numerically. Here is how simple the concept is:

Let’s say you and I walk into the same grocery store to buy some cereal…

  1. You go with the Honeynut Cheerios for $3.64
  2. I go with the store brand Honey-O’s for $2.09
  3. I save $1.55, you get a little bit better-tasting cereal

But at the end of the day, it’s just a $1.55 right?


The name brand cereal was a whopping 55% more than the store brand cereal. And that my friends is the trick to making sure you always control money.

Viewing money in percentage instead of the numerical value is not only a simple concept, but it is also the only financial rule of thumb you will ever need.

The playing field is level when you view everything in percentage.

Average Household Spending

Sabatier refers to this concept as “The only budget you will ever need.”

Essentially if you can reduce your percentages, or allocate more money to other areas such as saving more each month, you won’t need to count every penny or even have a budget for that matter.

However, that first starts with recognizing where most adults’ money goes (According to the United States Bureau of Labor Statistics 2016):

Category Amount %
Housing $18,886 33%
Transportation $9,049 16%
Food $7,203 13%
Insurance & Retirement $6,831 12%
Health Care $4,612 8%
All Others $10,700 18%

Note: The “All Others” category consisted of entertainment, charity/gifts, apparel/services, and any other expenditure, each ranging from 3-7%.

As you can see, the chart quickly reveals some areas of concern:

  1. The average adult is spending 49%, call it 1 out of every $2 of their money on a house & cars.
  2. The roof over your head, the car you drive and the food in your belly accounts for $6 of every $10 you make.
  3. Between housing, transportation, food & insurance/retirement, 75% of the money is accounted for each month.
  4. A 25% savings goal has never been harder to reach (but is still possible), hence why Americans are saving less than 3% each year.

While this should be eye-opening, the conventional way of looking at money wouldn’t expose these same truths.

But if that is the case, and simple math is the trick to most money issues, the question remains… how much should you be committing to each expenditure/spending category monthly?