Sounds simple, old fashion, yet it is so powerful for your personal finances. What is the golden budget rule for your financial well-being for your future?
We leave you to do your financial mistakes, but yet we want to help you to avoid major financial mistakes. You will be able to recover from smaller mistakes very fast.
So you are safe, as long as you follow the 50/30/20 budgeting rule.
What is the golden budgeting rule?
The rule is the old, ancient rule that still works in 2023. Surprised? 50/30/20% rule.
There are only 3 simple reasons why such a simple budgeting rule such as 50/30/20 will save you money.
1. You will never spend more than you earn with the 50/30/20 budgeting rule
Such a profound statement, yet this will set you up for lifelong financial well-being.
The first 50% of what you earn on a monthly basis foes towards your living expenses. Now we have another 50% left for us.
The main financial rule without this being a rule, actually more like common sense is that if you spend less than you earn on a monthly you will never go broke.
Because the money you don’t spend, literally, you don’t put into the pocket of others, will stay in your pocket. Or bank account.
The related question here is: How can I want to have a lifestyle of a Millionaire?
The answer to this, including the not spending rule is simple.
Earn more and you can easily have a lifestyle of a millionaire.
2. You will always include ”Pay Yourself First” (Savings section of the below picture) in your monthly budget
Pay yourself first and you will never go broke.
The 20% of the 50/30/20 budgeting rule goes towards your savings. A savings mindset and way of thinking mean that you are finding ways how to keep your money ”home”.
As per the financial experts and even from your life experiences you can tell that this is a main way to include in your personal finance surely.
Keeping money with you in the way of savings is done in these ways:
- emergency account — keeping cash equivalent to 6–12 months of your living expenses as liquid cash (easily accessible, mostly in your bank account or not fixed term saving account )
- saving account — a minimal interest rate and so this is not to make a millionaire, yet you will keep money with you
- fixed term-saving account — a type of saving account that has a higher interest rate that will be added to the principal amount you put into it
- any type of pension account/IRA — savings for your retirement future
- investment in bonds — very safe, companies or government bonds
Keep in mind that the above are all catered for keeping money not for making an insane amount of money.
Don’t expect to become a millionaire from any of the above.
3. You will reasonably set up a fun spending time on wants (minimizing the fear of missing out)
The 30% of your budget is dedicated to your wants, your hobbies, your shopping, and dining.
Literally, the point of having a budget is not ”NOT TO SPEND AT ALL”. It is to organize and manage your money, where they go.
Budget is your money management tool. you tell your money where to go.
Yet, the key point here is to follow your budget.
Unless you are at an early age, you could still skip as much spending and add the extra 10% to making money so that you can accelerate your money-making process.
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