sManaging a family budget is a difficult task, and there is a formula that can help. It’s about the base 50-30-20which states where you should spend your monthly income.
“Planning involves careful management of your household budget. To this end, you can use the 50-30-20 rule. It is a simple rule and consists of: Divide your monthly income into three parts, each with its own fixed destination‘, he explains Doctor of Finance.
How does the 50-30-20 rule work?
- 50% – ‘Aiming at Monthly household expenses, fixed or not. It thus includes rent or installment credit for housing, water, electricity, telephone, mobile, gas, internet, insurance, food, and transportation”;
- 30% – “Purpose Spending on your lifestyle. i.e. clothing, restaurants, cinema, theaters, concerts, and personal care such as hairdressers and gyms”;
- 20% – “Its purpose is necessarily savings. Set aside half of this money to create an emergency fund (it should have at least an amount equal to 6 months of your family’s expenses). But once you get that amount, set aside that half of the savings for another of your personal goals, whether that’s your kids’ education or a trip. The remaining 50% of the amount earmarked for savings applies to retirement financial products, i.e., retirement savings plans (PPR), superannuation fund (FPR) or retirement certificates (CR).
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