“My Favourite School teacher used to say this:
If Wealth is lost, nothing is Lost,
If Health is lost, something is Lost,
If Character is lost, everything is Lost.
I don’t have any complaints about this statement, but let’s adapt it to the present society scenario:
Don’t lose your Wealth because it takes care of your Health and protects your Character.
Do you agree with this? If yes, let’s move forward.
Remember, ‘Money Saved is Money Earned.’ You create wealth not only by earning more but also by saving wisely. It’s important to strike a balance because saving too much and not enjoying life can also be a poor decision.
So, here’s the question: How much should you save? Well, it depends on your income. Here’s a simple yet effective rule:
The 50-30-20 Rule:
This rule divides your expenses into three categories:
Needs: These are expenses that must be met, such as groceries, healthcare, home loans EMI, vehicle EMIs, etc. These are the things most people believe they cannot live without.
Wants: These are expenses that are not essential for survival but contribute to enjoying life, such as Netflix, Prime subscriptions, movie tickets, and outing expenses. While you can omit these and still live, life is meant to be enjoyed, right?
So, the rule is to allocate:
– 50% for Needs – These ensure your basic necessities are met.
– 30% for Wants – This section lets you enjoy the present.
– 20% for Savings – Savings are your investment in the future, including retirement.
Of course, there’s no hard and fast rule. You can allocate 20% for Wants and 30% for Savings if that suits your lifestyle better. However, I suggest not sacrificing the present entirely for the future. This is subjective, and finding the right balance is key to financial well-being.
Remember, Managing your finances wisely ensures you can enjoy both the present and the future.
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