14/11/2021
After years and years of studies, you finally graduated with a degree in your selected major. Soon, you landed a job in the relevant field with a basic income of $3,000 SGD.
Not bad for a fresh grad, eh? The very first month you receive your paycheck, you went on a shopping spree and spend on things that you could not afford before. Had frequent outings with your friends, enjoying expensive brunch and dinner. "Life isn't that tough after all." you think to yourself.
Then you realized something - "S**t! I now have to take on some financial burden for my family. Ah, I still have to pay for insurance premium as well. Eh? Still got my study loan ah!"
From then, you came to realise that you would have to be smart about your spending. But, this is the first time you're stepping out to the real world and adulting. How do you start?
You started googling and learning everything about personal finance. Everything seems complicated but there's one golden rule that every financial blog has mentioned at least once.
The Golden Rule Of Budgeting.
See, if you're just starting out. The easiest way to get yourself on track financially is to follow the 50/30/20 rule.
It's fairly simple.
50% of your income will go into your NEEDS. Such as expenses, food, bills, and loans.
30% will be set aside for your WANTS. You can spend it however you want. Those spendings are non-essentials and are optional.
20% of your income (this is the most important one) goes into savings and investment.
By following this simple rule (and be super consistent with it) for at least a year, you will realize that you will not have any worries relating to your finance at all!
Of course, depending on your situation, you may adjust the ratio accordingly. If you feel that you can sacrifice more in the short run and reap a bigger reward in the long run. You may also choose to save and invest 40% of your income and allocate only 10% to your wants.
Whatever you do is completely up to you! The most important thing that you must do is to always save and invest consistently whenever you get your paycheck!
What do you think about this golden rule? let me know in the comment section!
