money savings rules 50/30/20
Do You Know This Rule Of 50/30/20, If You Adopt It Then You Will Become Rich : Does your pocket also become empty within a few days of getting your salary? If yes, then understand that your financial planning is not right. In such a situation, if you follow the 50/30/20 rule, then not only will you have money by the end of the month, but you will also be able to accumulate savings gradually. Let’s understand what this rule is.
Every month begins with great expectations, as soon as the salary arrives it seems that now everything will go smoothly. But not even half of the month passes and the pocket becomes empty. And then the same tension that where did the money go? Now what to do for the remaining days?
If you too get caught in such a situation again and again, then it is time to show wisdom. An easy and effective way to deal with this problem is the 50/30/20 budget rule. This method will not only keep your expenses under control, but will also help you save for the future.
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What is the 50/30/20 rule?
This is a very simple rule, in which your entire income after tax deduction is divided into three parts. In which 50% is spent on essential things, 30% on desires and 20% for savings and investment. With this rule, you will not only be able to manage your current expenses properly, but will also be able to plan for the future. Let us understand the calculation of this rule in detail.
50% for essential expenses
This part includes all the things that are very important for living. Such as house rent, children’s fees, electricity and water bills, EMI and daily ration. These are such expenses that cannot be avoided. Therefore, it is wise to spend half of the total income on these. If these expenses are more than 50%, then understand that you will have to make some changes in your way of living.
30% for your desires
Now let’s talk about those things which make our heart happy like eating out, shopping, going on holidays, watching movies or buying a new mobile. These are not essential but make us feel good, but if we start spending too much on these things, then it affects both essential things and savings. Therefore, it would be better to limit this part to 30% only.
20% for savings and investments
It is very important to save some money every month, this money is useful in times of emergency and makes the future secure. Be it SIP, FD, or any other investment, you should invest at least 20% of your income in savings and investments. As your income increases, you can increase this portion further.
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