If you want to save money, then this article is for you. Does the salary end up in all expenses as soon as it comes and you have nothing to save? So don’t panic; this 50-30-20 formula can be of great use to you. This formula is mentioned in All Your Worth—the Ultimate Lifetime Money. The 50-30-20 formula is of great use to those people. Those who are unable to save due to expenses. If you are looking for a way that can save you, Then this article is for you. In this formula, an attempt has been made to divide your salary into needs, wants, and savings.
How to use 50 percent of salary
According to this formula, you should spend 50 percent of your salary on the things you need the most. Things you can’t live without. These expenses include things like rations, rent, children’s education, EMI, and health insurance.
Where to use 30 percent?
Now let’s talk about 30 percent of the salary. You can use this 30 percent on your desired expenses. There are some expenses in our lives that you can avoid. But these expenses also make you happy. These include watching movies, going to the parlor, shopping, and fulfilling other hobbies.
Apart from this, you can keep 20 percent of the salary child for savings. You can use this money for retirement, children’s higher education, marriage, and emergency funds.
Understand the example
Suppose you get a salary of 50 rupees every month. Now, according to the 50-30-20 formula, you have to use 50 percent, i.e., 25 rupees, for your required expenses. You can use the remaining 30 percent, i.e., 15 thousand rupees, for such expenses. Which you want to do. Such as watching a movie, traveling, or doing any fun activity.
Now use the remaining 20 percent, i.e., 10 thousand rupees, for saving. You can also use them for investments. If you want, you can invest 5 thousand rupees in a secure platform. Such as FD or post office scheme. Apart from this, you can invest the remaining Rs 5,000 in a mutual fund SIP. Keep in mind that mutual funds depend on the stock market. The returns on this depend on the fluctuations of the market.
