Back to the Black: The Debt to Wealth System, the 80:19:1 rule

The 80:19:1 Rule is a building block in the Back to the Black Debt to Wealth System.  This works in any currency but since I am in the U.K. I will stick to pounds sterling.

There are 100 pence in every pound. You should spend a maximum of 80p out of every pound you earn.  That is a maximum of 80%. You need to understand what the numbers are telling you. Understanding the numbers is important because numbers are a language that guide us in decision making.  If your basic mathematics are not good enough you will need to improve on this, sorry but it is your future.

So out of every pound you have 20p left.  Look around you, there are people worse off than you are. Out of the remaining 20p give 1p to charity. You can afford it, you have 99p out of every pound and they have 1p. I give to a cancer charity because my Welsh grandfather/Taid suffered from cancer and was given a life saving operation which gave him 30 years extra life before he died.  You decide who gets your 1p for every pound you earn and enjoy the giving, you are making a difference.

That leaves you with 19p out of every pound. This has 2 jobs:

  •  first of all to pay off debt
  • secondly to build a safety net, that is a savings pot.

Then, and only then, can you create the sort of future you deserve.  You need to prioritize your debts with the highest interest payment targeted to be the first one to be paid off.  Then  take them in turn. It is possible to be debt free and believe me it feels wonderful.

To your success.


2 Comments on "Back to the Black: The Debt to Wealth System, the 80:19:1 rule"

  1. Hi Graham

    That’s an interesting rule. Without having known it before you brought it to my attention, it’s what I’ve always done. The way I was brought up.

    However, I am starting to question my strategy because of the dreadful interest rates available which mean that my savings are losing money in real terms. However, not entirely sure what the options are – and appreciate you’re not here to give financial advice! Just musing…..

    Also my son is scaring the life out of me by recommending me to read books such as The Money Bubble by James Turk and John Rubino. I wonder if you’ve read it and what you made of it. (I’m finding it quite a challenge LOL)


    • Thank you Joy, I do not know the Money Bubble but will put it on my list of must reads. I developed the 80:19:1 rule when I was a teacher because my students 16-19 yrs simply had no idea on money management. This simple rule, made a huge difference to them. One said ‘ for the first time I am not in debt by the end of the weekend.’ Hurrah, a victory!

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