Modules for Personal Finance
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What is the ideal saving-spending ratio?
01:07 Mins Read
How much should you spend and how much should you save? That’s a dilemma that holds different answers for different people.
What is the ideal saving-spending ratio? Ideally, that depends on your individual goals and objectives. But there’s one golden rule for budgeting that can help you get started. The 50/30/20 rule. What do these numbers mean? Come, let’s find out. According to this rule, 50% of your income should go to meet your essential needs. Like rent, groceries, transport, and other utility bills. 30% of your income could be reserved for your wants. Like movie tickets, Dining out, Luxury purchases And your hobbies. And the 20%? That’s for you to save up And invest in long-term and short-term instruments. While this is a good rule to follow, Remember that it’s smarter to save up more than 20% if you can. Because the money you save and invest today Could grow into wealth tomorrow. So save, spend, and invest smartly.