It is very important to make a budget for financial planning. If you are spending money with the right planning, then you will not have to face difficulties. The 50:30:20 rule is the easiest to make a budget. In this, you divide your income into three categories. Under this budget method, income is divided into the category of needs, desires and savings. In this way, your needs are also fulfilled, desires are also not left unfulfilled and investment is also done.
Let us know how to make a budget with the 50:30:20 method
For 50 percent needs
This category includes rent, home loan, car loan, health insurance premium, purchase of grocery items. If your needs are 50 percent more than your income, then you can save more money by cutting down the cost of living. Such as going to restaurants less and cooking at home, resorting to carpooling to go out, reducing expenditure on luxury items.
30% of expenditure for desires
A person earns not only for his needs but also to fulfill his hobbies or to improve his lifestyle. This includes things like outing, outside/dinner, going to the theater to watch a movie, buying branded goods or gadgets. However, spending in this category needs to be done more carefully so that you do not overspend. For this, you can spend up to 30% of your income.
20% savings
Money is saved in this category for emergency situations so that when needed, you do not have to think much about spending and neither do you have to beg in front of anyone. In this, up to 20% of the amount can be deposited in SIP or you can buy a policy or you can collect it as an emergency fund.
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