Once you decide to save money, you probably also feel like cutting yourself off from social life, going out, shopping, or wasteful spending.
But don't panic! If you are looking for more space in your budget, the "50/30/20" rule. The creator of this rule on TikTok who goes by the profile @sharontseung said that this budget strategy requires you to put 50% of your income towards necessities, such as housing, food and debt payments; 30% towards your indulgences like shopping and dining out and 20% towards your savings account, emergency fund and future investment goal.
According to Gloria Garcia Cisneros, wealth manager, this trick is a good rule of thumb that if followed, will help you save money over time while maintaining flexibility in your account and spending.
"It works best for people with steady, predictable incomes, as it allows consistent amounts to go into each category each month," she says.
What do you need to know to apply this rule?
"Creating and keeping a budget is one of the best first steps toward financial stability," says Holly O'Neill, president of a US bank. But the "50/30/20" plan considers all the important factors, without leaving aside entertainment or expenses for various desires.
"This rule allows flexibility because you set aside a portion of your income for 'wants,'" says O'Neill. "That way, you can still have fun while making sure you're paying your bills on time while saving for the future." your."
How to test the "50/30/20" rule
To get started, O'Neill suggests analyzing your daily spending habits to see where your money is going. It is likely that the category of your monthly needs, such as rent or bank loan, electricity or water bills, food are primary, so they have 50% of the budget. The rest of the money can go directly to 20% of income for savings. In the end, the part of spending on clothes, dinners, vacations, etc. seems more manageable.
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Source: Bustle
