The Budgeting Principle
known as the 50/30/20 rule, or alternatively, the 50/20/30 budgeting
rule, allocates post-tax income into three distinct categories
Necessities
These expenses are those that you'd
most likely need to cover, regardless of
your location or employment such as
Rent Food, Transportation,Utilities bill etc.
Allocate 50% towards Necessities
Desires
Non-essential expenditures that elevate
your quality of life. This category includes
items like club memberships, weekend
getaways . dining out with friends , travel
for leisure etc . Limit your personal
discretionary spending to a
maximum of 30%
Savings
This Includes savings & Investment,
retirement funds, Loan repayments,
and emergency reserves—financial
priorities that you should contribute.
You can achieve more significant
progress toward a future free of
frustration by allocating as much of
your income as possible to this
category.
Choosing The
Right Budgeting
Method
It depends on various factors, but the
50/30/20 rule is a simple and effective starting
point for your budgeting journey.
