01/01/2022
Are you struggling to look for financial plan method that works for you? We have a suggestion for you! You can try 50/30/20 Rules to start overviewing your spending of the months.🤩
What is 50/30/20 Rule?
The 50/30/20 rule is a simple budgeting approach that can assist you in successfully, easily, and sustainably managing your money. The general idea is to divide your monthly income into three spending categories: 50% for necessities, 30% for wants, and 20% for savings or debt repayment.✌️
It will be easier to adapt to your budget and keep your spending under control if you know exactly how much to spend on each category. The following is an example of a budget that follows the 50/30/20 rule:
💵Spend 50% of your salary on necessities:
Needs are unavoidable expenses that your difficult to survive without
For example, basic groceries, loan repayments, electricity bills, insurance, transportation.
💵Spend 30% of your salary on desire:
Non-essential expenditures/ spend your money even though you could live without them just because to fulfill your want.
Just simply ask yourself, “Can I live without this?” If yes, that’s a desire!
For example, entertainment subscriptions(NETFLIX), dining out in fancy restaurant🍻, additional clothes👠👗
💵Spend 20% of your salary on savings:
This action can help you construct a better, more long-term savings plan.
Reason: Your ultimate aim is to build an emergency fund, create a long-term personal financial plan, or save for a deposit for a house.🏠
References: N26 GmbH 2021, “The 50/30/20 rule: how to budget your money more efficiently”, 06October, 2021.
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