By following the 70/20/20 rule,you can create a well-rounded financial plan that covers your needs,prepares you for the future ,and lets you enjoy the present.Implementing
this strategy can help you manage your money more effective ,reduce financial stress ,and ultimately live like the top 1%.So take control of your finance today and start applying
the 70/20/10 rule to acheive financial freedom and peace of mind.
70%:living Expense
The 70% allocated to Living .This portion of your income should cover essential expenses such as rent or housing,food,trasportation,insurance,groceries,hea
lthcare,utilities or medical.By keeping track of these necessary costs,you can ensure that your basic needs are met without overspending.Budgeting for these
essentials helps you maintain a stable financial foundation ,which is crucial for long -term financial health.For example
if you earn 1 lakh
you can allocated70,000 /-(Living expenses)
or
you can allocated 20,000/-(Saving)
and 10,000/- (other goals)
20%:Saving
he 20 % of allocated saving and investing of your income such as emergency fund,future expenses(sinking fund),retirement fund),education fund,marrige fun,short term fund or passive income.within this category ,its wise to set aside 3-5% as an emergency fund .This fund facts as a financial safety
net ,protecting you from unexpected expenses like medical emergencies or urgent home repair.The remaining portion of this 10% should be invest in reliable option
such as index funds,which offer a balanced and diversified approach to growing your wealth over time.smart investing can help you build a secure financial future
and achive your long term goals.For example
if you earn 1 lakh
you can allocated70,000 /-(Living expenses)
or
you can allocated 20,000/-(Saving)
and 10,000/- (other goals)
10%:Other Goals or Debt Payoff
The 10% of allocated Other goals or payoff .This portion of your income should cover essential expenses such as charity ,self education ,passive capital ,compunding
can create wonder for you active investment will at start it will not very significant ,but years on years it will keep accumulating ,and years later it will become a huge amount.
For example:
if you earn 1 lakh
you can allocated70,000 /-(Living expenses)
or
you can allocated 20,000/-(Saving)
and 10,000/- (other goals)
FAQs About 70/20/10 Budeting Rule
What is an example of a 70/20/10 budget?
By allocating 70% for what you need, 20% for what you want (either immediate luxuries or future savings goals), and 10% for your goals (like paying off debts and saving or investing in your future), you can work towards a greater sense of financial wellbeing.
What is the 70/20/10 rule example?
For savings, you would multiply 6,000 x 0.20, or $1,200 to put toward savings and debt. Lastly, you would multiply 6,000 x 0.10, and see that you have another $600 to put toward additional savings and/or donations
How to calculate 70/20/10 rule?
First, calculate your monthly take-home pay, then multiply it by 0.70 to get the amount you can spend on living expenses and discretionary purchases, such as entertainment and travel. Next, multiply your monthly income by 0.20 to get your savings allotment and 0.10 to get your debt repayment.
Conclusion
The 70/20/10 budget rule is a framework for allocating your income to three categories: needs, savings, and wants. Here’s an example of how the 70/20/10 rule can be applied.