X-Curve Concept: Correlating Age, Wealth, & Responsibility

Last Updated on: September 18, 2023

In a seminar of I attended in Makati in 2016, I learned about the X-Curve Concept, which I think is one of the most important personal finance principles I learned early on.

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The X-Curve Concept, Img

The X-Curve shows the relationship between how our responsibilities change through the years in inverse proportion to building our wealth. The drawing of two intersecting curves represents this simple concept.

The X-Curve is mainly divided into two, the responsibility curve and the wealth curve.

The Responsibility Curve

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Responsibility Curve Of The X-Curve

The Red Curve represents the “Responsibility Curve.” It shows that our responsibility is greater while we’re younger and gradually decreases as we grow older.

It is noticeable that many young adults enter the workforce with the weight of familial responsibilities. Many young professionals have siblings to help them go through school and parents to support them.

Within a few years, they will also start having a family of their own, which will also add to their existing duties. During this time, it can be overwhelming to handle.

However, it eventually starts to lessen since familial obligations will soon be shared between siblings, and children begin to grow up and live independently.

Though it is simple in theory, there are still many variables that will affect a person’s responsibilities, especially with the Filipino culture’s closer family ties.

The Wealth Curve

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Wealth Curve In The X-Curve

The Blue Curve represents the “Wealth Curve.” It shows that our financial capability is lower when we’re younger and gradually increases as we grow older, provided that we make the right financial decisions.

For fresh graduates, it is customary to enter the workforce with a low salary range while learning the ropes of the industry.

However, that low salary should be divided among all of their current responsibilities while building their personal goals.

Yet, this is also a simplistic point. Even with budgets in place, some people will still have a more challenging time balancing their finances with their responsibilities.

Think of it this way: if the limited salary is already tricky to budget for ordinary citizens when they have someone to share their responsibilities with, it is much harder for the breadwinners.

Still, everyone should learn how to save and invest while younger, so they are easier by the time they grow older.

For people having difficulties adjusting their budgets to meet their expenses, then maybe living frugally is no longer enough. They may need to find other forms of income through side hustles. 

Eventually, your portfolio will definitely increase with proper money management, savings, and investment strategies.

The Wealth-Responsibility Crossover

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The Wealth-Responsibility Crossover Point

At the center of the picture is the intersection where the wealth and responsibility curve crosses over.

At that moment, your responsibilities start to decrease. In contrast, your ability to create wealth for yourself and for others starts to increase.

So, it is crucial to do the right things today to build the habits that will place that crossover point closer to your present self.

Learn from other people who have never seen the point where the weight of responsibility and the beginning of wealth converge.

Final Thought

The X-Curve Concept may appear simple in theory, but it is complicated in practice. There are so many variables to consider, which can even be beyond our control.

The good thing about our generation is we now have the power of information through the Internet and can apply more concepts such as this to escape the rat race.

Key Takeaways:

  • The X-Curve is a principle shown through a graph relating how responsibility and wealth change over time.
  • The responsibility curve shows that you have more responsibility when you are younger and decreases over time.
  • The wealth curve shows that your wealth is lower when you are younger but increases eventually as you grow older.

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