{"id":5439,"date":"2019-02-27T09:00:38","date_gmt":"2019-02-27T03:30:38","guid":{"rendered":"http:\/\/capitalante.com\/?p=5439"},"modified":"2019-04-12T23:47:28","modified_gmt":"2019-04-12T18:17:28","slug":"50-30-20-rule","status":"publish","type":"post","link":"https:\/\/capitalante.com\/50-30-20-rule\/","title":{"rendered":"What is 50\/30\/20 Rule of Money"},"content":{"rendered":"
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Earning and saving both are equally important. Saving is needed to secure future or to meet the future obligations such as after retirement life, education cost of children, and marriage cost of daughter if any, to own a house, treatment cost of self and family members, to finance the son for his business or any other occupation. So, from the rising of sun i.e. early days of employment you should concentrate on savings and proper management of the savings to beat the inflation rate. Now the question arises how much you should or can save. Here we will discuss how much you should save to secure the future without any financial woes. Here we suggest you a rule of 50-30-20 strategy i.e. 50\/30\/20 rule of money.<\/span><\/p>\r\n \r\n\r\n<\/span><\/p>\r\n \r\n\r\n<\/span><\/p>\r\n Senator Elizabeth Warren coined the term 50\/30\/20 rule in her book \u201cAll Your Worth: The Ultimate Lifetime Money Plan.\u201d This calculation is very simple and very easy to apply. You should divide your post-tax income into three parts and allocate every part for every sector. Your income will be divided as 50% on needs, 30% on wants and the rest 20% for saving. Let\u2019s elaborate each component in 50\/30\/20 rule,<\/span><\/p>\r\n \r\n\r\n<\/span><\/p>\r\n \r\n\r\n<\/span><\/p>\r\n Needs are such expenditures that are needed to meet the basic requirements for survival such as grocery food, cloth, home rent, utility bills, premium of health insurance as well as term insurance, medical expenses, transportation cost etc. These are the basic amenities for survival. You can allocate your 50% of income to fulfill these demands. But you should not include the dining out in weekend, Netflix Subscription costs as the needs.<\/span><\/p>\r\n \r\n\r\n<\/span><\/p>\r\n If your earning is low, you can increase this percentage but anyhow you have to manage at least 20% savings. If from 50% earnings your needs are not fulfilled then you should compromise with the wishes and lifestyle. You should compromise with some matters.try to maintain a simple lifestyle to keep you basic expenditure within you 50% of income. It is also advised to lead a lifestyle that can be maintained after the age of 60 i.e. retirement life.<\/span><\/p>\r\n \r\n\r\n<\/span><\/p>\r\nWhat is 50\/30\/20 Rule,<\/strong><\/span><\/h6>\r\n
Needs i. e. 50%<\/strong><\/span><\/h6>\r\n