50/40/10 rule!
The 50/40/10 rule is a simple guideline for budgeting your money effectively. this rule is flexible so you can apply it on your individual financial situation.
50 % NEEDS
This includes essential expenses. It’s important to know your essential expenses. for example, food, housing, transportation, and healthcare. this are the things that you can’t live without. spend your 50% of income on your needs. or adjust the percentages which fit to your financial situation.
40%SAVING OR INVESTING.
This includes saving your money on savings a/c, fixed deposit etc. and if you want to invest. you can invest in stocks, golds, real estate, bonds and etc. more you invest the more you will get higher returns in future.
10% WANTS.
This includes unnecessary expenses. for example, after spending money on your essential expenses. and the left-over money you spend on new car
Going to the movies, buying new clothes, Traveling. spend your 10% or less then it on your wants. the less you spend on your wants. you will have more to save or invest.
here example of 50/30/20 rule
If your income is 50,000₹
> NEEDS = 25,000₹ (50%)
> INVESTMENT=20,000₹ (40%)
> WANTS=10,000₹ (10%)
To follow this 50/40/10 rule, always track your income and expenses. and make sure tour staying on budget. You can use a budgeting app or write your expenses in a notebook.
SOME TIPS FOR 50/40/10 RULE!
1. ADJUST YOUR BUDGET!
The 50/40/10 rule is just a guideline, not a hard rule. If you want to adjust the percentages to fit your financial situation you can, that’s fine.
2. SAVE AND INVEST MORE!
Make saving and investing a habit, if you want to achieve your financial goals. make sure Even if you can only save a small amount, just save it.
3. MINIMISE YOUR WANTS!
Spend less money on your wants. like dining outside, going to the movies, always buying new branded clothes, and Buying entertainment, such as video games or streaming subscriptions. Avoid impulse purchases. Wait 24 hours and think before buying something that you don’t need.
4. INVEST WISELY!
Before you invest money in any company, make sure you Analyz the company. like company’s financial performance, company's debts, valuation of company.
