Best Financial Planning: The 50-30-20 rule is very useful, if you follow it then you will be rich. Financial Planning 50 30 20 rule is very useful if you follow it then you will be rich

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50-30-20 Formula

50-30-20 Formula

Experts point to an important rule, which should be followed when you spend money. This is the 50-30-20 rule of financial planning. This basic budgeting rule divides your after-tax income into three categories of expenses. As a general rule, a person has to allocate 50% of his income to necessities or necessities. These essential items may include monthly rent payments, household expenses, purchases, insurance payments, EMI payments and school fees for children.

Use 30 percent here

Use 30 percent here

30% of your income should be saved for your needs. This may include entertainment, family outings, recreational activities, dining out, etc. Although these events are fun to experience, they are not necessary and can be interrupted if necessary.

20% savings

20% savings

Finally, 20% of your income should be used for savings. These savings can include any amount you choose based on your risk profile.

It is necessary to allocate funds

It is necessary to allocate funds

When you have a fixed amount that you know you will allocate to different income groups, it is easier to budget each month and stick to it. As income increases, one can change the distribution of income in three groups according to these guidelines.

this is also important

this is also important

Create a financial goal and try to achieve it with 20% investment. Use a budget. But in order to achieve your financial goals, you need to change your mindset. When you are mentally prepared, start setting goals. Then you too will find it easy. It can be difficult to establish new habits in your culture, but if you don’t, it will be difficult to stick to the budget. There is no point in thinking about sticking to these habits for the rest of your life. You have to think according to your purpose. Take the support of family members to change your habits. Here it is necessary to take their help to reduce costs.



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