50-30-20 rule for Effective Money Management:-
Comrades! Nowadays for many people earning money isn't a big deal at all but right now managing money is matters in this particular blog I'm gonna discuss one of the best finance management rules ie,. 50-30-20 rule which helps us for effective money management
Let's see what is 50-30-20 rule
What is 50-30-20 Rule?
Explanation:
We need to apply this rule for our net income here net income refers to the cash leftover after deduction of all taxes. As per 50-30-20 rule the first 50% of our net income we can spend on our needs. Here needs means something that we can't live without like grocery, health insurance, housing etc,.
And next 30% of our net income we can spend on our wants. Here wants means something that we can live even without, wants are all the things we spend money on that aren't absolutely essential this includes shopping, dinner , movie outs, weekend vacations etc,.
Finally 20% savings, we should try to allocate 20% net income to savings and investments and we should have at least three months of emergency savings on hand incase if we loss our job or an unforeseen event occurs.
Conclusion:
The rule 50-30-20 is a financial formula is recommended for beginners to create financial discipline and to inculcate investment habit.
This is all about 50-30-20 rule in the next blog I will discuss 70-30 rule which is recommended for the people who are already aware of investment and who wants to create great wealth in future so stay tuned!
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