In this post, I’m going to share The 65-25-10 Rule, which helps you allocate your efforts towards meaningful results.
Using this simple formula, your time spent working will be effective, efficient, and you’ll be provided with a consistent dose of motivation along the way.
If you’re ready to boost your productivity and motivation, then this post is for you!
Let’s get started..
The Birth of 65-25-10
You’ve almost certainly heard of the 80/20 Principle (or Pareto Principle) before; the concept that 80% of your results are coming from just 20% of your actions. What I’m about to share is a formula that picks up where the 80/20 Principle leaves off.
Similar to many entrepreneurs, I’ve been a huge fan of 80/20 for years (and I also attribute much of my success to its use). It is quite rewarding to find that vital 20% and put more of your focus there.
But as powerful as that concept is, there always seemed to be something missing..
While it shows you what you should be focusing on, it does leave something important out. Motivation.
Shifting the Focus to Results
As important as it is to work on the 20% of your business that is crucial to your success, I’ve found it equally important that you stay motivated to continue on.
The 65-25-10 Rule is about hitting milestones consistently.
Think: relay race, NOT a marathon.
What good does it do you to focus on the 20%, if the results from that 20% will take months or years to be seen? Not much.
Productivity Is Where Motivation And Determination Meet.
It was this realization that helped me begin to develop the 65-25-10 formula.
What is the 65-25-10 Formula?
The first question I had to answer was what exactly needed to be allocated, and at what percentages?
I soon realized that it was my actions that needed to be allocated, and allocated into 3 different categories; short, medium, and long term objectives.
I eventually settled into a split of 65/25/10, which is how I divide my working hours.
65% – Results within 30 Days
I usually refer to this block of time as my short term focus. Spending nearly two-thirds of my time on the actions that will yield results within a month’s time seems to be the sweet spot.
This allows me to hit a few milestones each month, which really helps with maintaining focus & consistency with my work schedule.
25% – Results within 30-90 Days
This next block of time is the mid or medium term focus. This block is important for keeping a bit of focus on the future.
(I’ve often fallen into the trap of putting too much of my focus on the future, and not enough on the present.)
This block helps keep you looking ahead, rather than just on whatever happens to be right in front of you. It also helps build up the habit of delayed gratification.
10% – Results Expected in 90+ Days
While it is important to focus on the short and medium term time frames, it is also good to look a bit further out. This 10% is for time frames that range from 90 Days to 1 Year.
This smaller piece gives enough focus on the longer term without sacrificing the here and now. This can also be seen as your ‘speculative’ time block.
Things often change drastically in a year’s time, so putting too much focus on an objective too far out there can be detrimental. This is especially true if your situation changes before you get there.
How These Categories Work Together
What I’ve experienced since allocating my time this way has been nothing short of life-altering.
In the past, I would jump around from a mostly short-term focus to a mostly long-term focus, and everything in between. This led to inconsistencies in when I would achieve results and hit milestones.
A short-term focus meant that I was achieving lots of results, but they weren’t actually moving me forward very much.
A long-term focus meant that I was ultimately moving forward, but not able to stay motivated long enough to reach my objectives.
It’s easy to stay focused and motivated when you have something to show for your efforts; small wins & milestones being hit week after week, month after month.
Check out this infographic for a summary of the 65-25-10 formula
How To Apply The 65/25/10 Rule
Implementing the 65-25-10 rule has brought my work life back into balance, but I’ve also found several other areas of my life where this ‘action allocation’ model can be used.
This is where it all started. 65-25-10 was created to address my personal productivity, but it can be applied to both personal and professional productivity.
To implement the 65-25-10 strategy, all you have to do is list your goals and objectives for the year, and categorize them by the estimated amount of time needed to complete them.
Budget & Personal Finances
I’ve also found this allocation formula works well for managing your budget & personal finances, and it tracks closely to the recommended budget described in The Richest Man in Babylon.
65-25-10 For Your Budget
Here is an example of how this would look for a personal budget:
65% Living Expenses
These are your everyday costs such as housing, food, vehicles, utilities, etc. Working towards the target of 65% of your income will increase your financial fitness.
These savings can be used to replenish your emergency fund, pay off debt, and then used for large expenses later on (vehicles, education, down-payment for housing, etc.)
These are the long term investments that will support your lifestyle if you plan on a traditional retirement, or as the estate you plan to leave for your heirs.
65-25-10 Asset Allocation
Similar to your personal budget, the 65-25-10 rule works well for asset allocation. Below is how I personally have my investments allocated.
65% Investing for Safety
My largest category focuses on safety. The main goal here is to ‘not lose’ money, and slightly outpace inflation. I use the passive investing strategy outlined in The Permanent Portfolio.
25% Investing for Growth
For me, this category is for active investments where I have direct control on the outcome. Mainly buying low, adding value, and then selling high; with a short-term turn around.
These are my long shots – high risk & high reward. I tend to fail 9/10 of the time, but often make 10x or more 1/10 of the time. These investments are complex & creative, and full of excitement.
Creating Life Balance With 65-25-10
65/25/10 is about more than productivity and motivation. This formula can also be used to create a balanced life.
A balanced life will make time for work, growth, and recreation; life can begin to lose meaning if time isn’t being spent in one or more of these categories.
For most people, work takes up the biggest portion of their time. If you find yourself frustrated, depressed, or feeling a little ‘off’, it’s a good sign that work has edged out at least one of the other two categories.
This category is for any activity that helps you grow as a person. Things like education, your spiritual practice, learning new skills, prioritizing a good diet and fitness regimen, and so on.
Whether it’s spending time in nature, playing games, cultivating relationships, or even just reading or watching a movie, recreation provides a break from ordinary life for a bit of refreshment.
The big takeaway is that properly allocating your time helps optimize your motivation, which then results in becoming more productive with your time.
And each small improvement will lead to a rich and fulfilling life.
The 65-25-10 Rule is just a guide. The main theme here is that almost everything we do can be broken down into smaller parts, and those parts can be sorted.
By being aware of this, we can plan our actions and execute them better, leading to more effective results.
I encourage you to take a look at the way you spend your waking hours. Pick an area that could use some improvement, and then look at the way you’re currently allocating your time & actions.
And often, just a simple small shift can lead to a huge improvement over time.
What about you?
What area of life do you need to bring into balance?
Let us know by leaving a comment below.