BUDGETING FOR EXPENSES- A Starter's Thumb Rule 50-30-20!

Yew ! Keeping expenses under control. An activity that baffles most of us!

On understanding how to keep a check on expenses, saving enough and also keeping pace with the rising costs often makes us think that managing expenses is a tall task! but it is not that cumbersome--Here’s the good news that budgeting of household finances can be made simpler. A little more of being organised and disciplined, and some simple math can help with you with budgeting.

Discussing today – the 50/30/20 rule. (A practical thumbrule to get started )

Don’t let the numbers confuse you – it is actually simple. It means that 50% or half of your salary should go into basic expenses, 30% should be used for discretionary and 20% should go into savings.

So, whatever your net earnings are, half of it should be budgeted for your basic expenses, or what we can call essentials.

This includes your rent, EMIs, transportation, utility bills such as electricity, gas, internet, hired help etc, and groceries and other fixed costs. In case of children or elderly in the house, education and related expenses and medical costs should also be a part of these fixed expenses.

The next part is the discretionary expenses. Sometimes, discretionary expenses or wants can be bordering on the line of essentials – but that is something individuals need to take a call on.

But your wants or discretionary spending would ideally be things you can do without, and curb when needed. This could include eating out, an impromptu shopping plan, going out for movies, or monthly subscriptions to various streaming services.

About a third of your total budget goes into these things - good to have, but can be avoided if needed.

The most important part, perhaps, of budgeting is saving – something that often goes on the back burner because of higher-than-expected expenses.

One-fifth or 20% of our monthly income should go into savings – it may seem complicated initially, but it is possible with discipline and of course, budgeting.

A smart thing to do, of course, would be to keep aside savings as soon as you get your salary, as this could help curb discretionary expenses in case your essential spending exceeds budget for the month.

So, there you go – the 50, 30 and 20 of your budget. All the best ! 😊

😊Hope you enjoyed or appreciated reading this one. Thank You, keep safe & Be Empowered... 😊
This blog “Finmission’s Class" is an effort to educate and spread the word of financial knowledge and awareness whilst empowering the community with a touch of practicality on personal finance.
For any queries and assistance related with incidental financial advisories for insurance and for goal based financial plan, you may feel free to write at the "contact us" form in the blog or you may please ping a message through Whatsapp (Mobile No: +91 9499979180) or call at the mentioned mobile number or email at finmissionllp@gmail.com  and we will be most glad to guide your path to financial freedom.