Amazing 50:30:20 Formula! There Will Never Be A Shortage Of Money In Life

Abhay Singh
5 Min Read
50 30 20 Formula

Inflation is increasing; savings are being eclipsed because income is decreasing. Inflation is troubling everyone, whether rich or poor; people are worried about the future. The middle-class family is extremely helpless; their problem is what to eat and what to save. But even in this era of inflation, you can continue saving while running a household by adopting a special formula.

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By the way, it is also said that if you want to save money, then use scissors on the expenses. But there is an exact formula among all these, based on which you can easily coordinate between expenditure and savings. This formula is known as 50:30:20. Simply put, the income has been divided into three parts.

This Formula Applies To Every Man

If employed, you can apply this formula to the salary that comes into your account. On the other hand, if you are a businessman, using this formula on the entire month’s income can save you big money despite all the expenses. Let us now know how this formula works.

For example, if your salary is Rs 40000 per month, and you cannot decide how to save money? First, let’s understand the 50:30:20 formula- 50%+30%+20%= 100%. That is, you need to divide your earnings into three parts.

First Of All, These Essential Expenses…

Spend the first 50 per cent on essential things, including food, drink, living and education. Living here means if you live on rent, then every month’s rent is. Or if you have taken a home loan, then it’s EMI. For this, you have to list the first month’s expenses. Set aside half of your income for these things, or transfer it to another account. That is, try to settle all these works for 20 thousand rupees.

50 30 20 Rule
50 30 20 Rule

Fixed Amount For Lifestyle

Under the formula, spend 30% of your income on things related to your desires. You can keep outings, watching movies, eating out, gadgets, clothes, car, bike and medical expenses. You can do the costs related to lifestyle from this head. According to the rules, a person earning Rs 40,000 a month would be advised to spend a maximum of Rs 12,000 on these things.

Saving Is Important In The End…

The 50:30:20 formula says that blindly save the remaining 20 per cent first and invest it in the right place. That is, invest the remaining 8 thousand rupees. You can invest in SIP and Bond monthly in Mutual Fund.

According to this formula, those earning Rs 40,000 can save at least Rs 1 lakh annually, and when you invest these savings in the right place, they will grow year after year and compound interest on the interest earned on it. By joining, it will become a fat fund.

50 30 20 Budget
50 30 20 Budget

No Need To Worry About Retirement Fund

Apart from this, the investment will also increase as the income increases. Believe me, after spending and saving under this formula for 10 consecutive years, there will never be a shortage of money again because the savings money will become a big fund, which will support you in trouble.

Apart from this, if you keep saving 20 per cent in the same way for 20 to 25 years, you will not have to consider a retirement fund. At 60, you will have a vast amount, which you cannot imagine today. But this dream will come true only if you follow the 50:30:20 formula with honesty and strong will.

Curb On Extravagance…

If there is a problem in saving 20 per cent in the beginning, then make a list of what things are for your need and what is useless. Immediately put a check on extravagance. For example, if you have a habit of eating out for 4 days a month, then do it twice a month for the time being. Avoid buying expensive clothes. Also, stop using Credit cards indiscriminately. Apart from this, avoid buying those things which you do not need.

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By Abhay Singh Journalist
Abhay has been with News Waker for over a few months and has covered various topics, from politics to business to sports. He is known for his engaging writing style and ability to explain complex issues in a way that's easy to understand.