No matter age you decide to begin your journey to managing your money well, it is important to lay a proper foundation and have a goal in mind.
50% of your money should be allocated for needs.
This is the most important expense vertical that needs to be met. A 50% allocation is given to this because these are items/products/payables that enable us to go on with our daily lives. Though it may be tricky for some wants to cross over as needs here’s a guide: Needs are defined as essentials that you need to live.
To name some these essentials are food/groceries, payment of rent, transportation cost, etc.
While 20% of your money is portioned for savings.
It is never too early to start building up your savings funds. You may be hearing a lot about emergency funds as the world is hit by a pandemic but this is something that you must also prioritize to help you secure your future and keep you out of debt. Savings can also mean it is for money management such as savings for debit payments. This is a good tip that can help you avoid drowning in debt as well. Another way of saving could also be allocated for milestones such as retirement. But overall 20% of all your money should go to these savings items/goals.
Then 30% of your money goes to our favorite segment, our wants.
These include the things we desire and not necessarily what we need. These include your favorite food from fancy restaurants, high-end gadgets, and alike. Though it’s okay to spend a few luxuries every once in a while, your priority should still be the portion for needs and savings. To better manage your income, especially in this pandemic, one should know the delineation of needs and wants. Then, you can keep track of your spending and more importantly where your money goes.
If you want to be able to enjoy the most of your hard-earned money, this is the way to go. The big picture here is that this way of saving helps you to live within your means also prevents you from falling into a trap of overspending.
Source: www.pnb.com.ph
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