What the ‘50%’ Really Entails In The 50/30/20 Rule And How To Maximize It
Despite being considered common knowledge, the 50/30/20 rule is not as widely adopted as many believe. So, as we promised in our previous newsletter , we will be shedding more light on the “50%” of this rule.
The Importance of the 50%: Covering Your Needs
50% is the most important part of the rule because it covers your needs. Needs are necessary for survival. As a financial advice, half of your income should be enough to cover your needs and obligations.
If you spend more than 50% on your needs, consider cutting down on wants or changing your lifestyle. For example, you can take public transportation to work as a solution or cook at home more often. Examples of "needs" include:
Maximizing the 50%
Learn to keep things balanced. Don’t overspend on things you don’t need. The 50% fixes you in a tight spot so you only focus on what you need. This way, you can stay secure financially and prepare for unexpected expenses.?
Find ways to save money, and know the difference between what you ‘Need’ and ‘Want’ - that’s a story for another day. Mastering this concept will lay the foundation for your financial freedom.?
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