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By:Savardekar
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The 50/30/20 rule is a budgeting method based on percentages that is intended to help you manage your money easily and effectively.
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To use it, divide your monthly after-tax income into three categories: needs, wants, and savings or debt repayment.
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With just 3 main cat. of spending, you can ensure you pay all your bills on time, have money to do what you want, are getting out of debt & are increasing your savings.
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As simple and appealing as it may sound, it is not a one-size-fits-all solution. Determine whether the 50/30/20 rule will work for you.
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1. 50% for Needs. Needs are your essential living expenses. Needs include fixed expenses, obligations to pay, and necessities for survival.
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2. 30% for Wants. Wants are non-essential expenses that you pay for but could do without. Examples include: Gym memberships, Leisure travel, Starbucks, Hobbies
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3. 20% for Savings and Debt Repayment. Save 20% of your net income. Investments, an emergency fund, and retirement savings are all included.
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The 50/30/20 rule is a simple budgeting strategy that divides your net income into three budgeting categories: needs, wants, and savings or debt reduction.