Many people have asked the questions over the years with regard to cash allocations.
The following is an outline of ways to consider gross income.
All is subjective to the respective household. Yet, the basic principles remain in place.
Cash Allocation Examples
— Be disciplined.
— Stay within needs.
— Save cash for wants.
— As possible: Zero debts!
I. Give unto GOD
A. First fruits 2.5%,
B. Tithing 10%
C. Offerings 10%
A. 10-15% long-term capital gains tax depending on domicile,
B. Trade deals up to 40% tax
III. Basic needs
A. Food such as groceries
B. Shelter (up to an example 25% of monthly budget)
1. Childcare needs
IV. Longer-Term Financial Planning
A. Simple savings with 3-6 month living expenses
B. Example stock market investments
1. Johannesburg Stock Exchange
2. United States stock exchanges
3. Other global stock exchanges
1. Pension fund contribution
2. Private equity opportunities
a. Full or partial business ownership
b. Loaning cash to a business
D. Real properties can be expensive ongoing investments with long-term smaller gains than stocks
V. Bank and Brokerage Accounts
A. Bank accounts
1. Checking for everyday use
a. Short-term (example: 3-6 months living expenses)
b. Medium-term (example automobile)
c. Long-term (example real property)
B. Brokerage accounts
1. Basic brokerage account for stock exchange
2. Pension brokerage account for stock exchange.
3. Asset allocation example:
a. 25% cash equivalent lower interest money market to benchmark and for liquidity
b. 25% market index funds to benchmark long growth
c. 25% blue chip dividend growth stocks
d. 25% mix of distressed, turnaround, small, and medium undervalued stocks.
In due course I may elaborate on the points above.