The main motive of winning is to ensure that one gets money to buy basic necessities to ensure his survival as well as that of his family. However, in addition to the essentials, one should ensure that one has a little extra money for important but non-essential goods and services, as well as for investments to ensure the maintenance of living standards. also in the future.
Thus, one should make a budget and divide his regular income into three parts – for essentials or needs, non-essentials or wants and savings for future sustenance or to pay off debts incurred to purchase assets at home. ‘advance.
“Budgeting methods can help you feel safe and maintain discipline while managing your money. They help you reach your financial goals and achieve long-term financial freedom. And the 50-30-20 rule is a popular rule advised by experts for many years where one can divide his income into three different parts to spend money efficiently,” said Anil Pinapala, CEO and Founder of Vivifi India Finance.
“As a result, 50% of your monthly income is used for essentials and basic needs to be met each month, 30% for indulgences and wants which may include restaurant visits, excursions, etc., while 20% is hidden for savings or to pay off debt. Savings are an important part of an individual’s income as they can be used to comfortably fund retirement days, for unforeseen emergencies and to use for expenses in old age,” he added.
However, the more you are able to save, the better your future years will be.
“While this rule is simple and works well in most scenarios, you need to consider people’s ever-changing lifestyles and financial goals today, where priorities and ratios may vary for better s adapt to the times in which you live and help you. achieve ultimate financial freedom,” Pinapala said.
Expressing his views on the 50-30-20 rule, Vikas Garg, co-founder and CEO of Paytail, said, “Regular income breeds a strategy that allows you to support yourself, while striving for quality life you desire without having to live paycheck to paycheck every month.
“In an ideal situation, it is recommended that an individual use their income in the 50-30-20 split, i.e. 50% of their income is distributed and used for necessary and unavoidable expenses such as loan repayment, rent, food, utility bill payments and more, while using up to 30% to purchase goods and services that may be important but not needed, and save the rest of the 20% that allows the individual a liquid corpus available for emergencies or larger purchases in the future.It is an effective way to grow savings while having the freedom to enjoy and indulge at leisure,” he added.
Reiterating the need for savings for future survival and comfort, Garg said, “This method can be used by individuals to meet their short, medium and long term investment goals and plans. This is not a hard and fast rule, and a person can choose to save more of their income if circumstances allow, creating financial security for the future.