The popular 50/30/20 rule might help individuals in getting their finances on track for the New Year. Put simply, this rule is designed to help people manage their money in an effective way that should stand the test of time. The basic rule is to divide one's monthly income, after taxes, into three main spending categories which represent percentages.
Firstly, Aim to spend 50 percent of your income on their essential needs. This could include living expenses, rent or mortgage payments, bills and food, for example.
Another 30 percent should go towards what you want on a fairly regular basis. This could be money put aside for eating out, going on shopping trips, or weekend breaks and regular hobbies.
The final 20 percent, it is recommended, should go towards savings or debt. People could pay off their debt beyond a minimum level, or choose to put their money aside for the future. For some, a savings account could be the best choice, while others might opt for investments with the potential chance of a higher return.
Alternatively, individuals rapidly approaching retirement might choose to put their 20 percent into their pension fund.
Once you understands how much money they have coming in monthly, such as their salary, they can get started with implementing the rule into their lives.