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Managing Finances

How the 50-20-30 rule might work for you if you're dealing with a tight budget.

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Living Day by Day

Income is something we all look forward to. It is the force that drives our everyday lives in what we eat, drink, entertain, and maintain. There are many things one can do to gain a steady income, regardless of your educational status. One can work odd jobs doing handy work for people (if you are good with your hands and crafts), chauffeur work (if you own a car), car washing, house sitting, etc. There are even online jobs that can add a little to your income.

The idea is to make yourself as marketable as possible. If you really love to do something, why not use it to your advantage? You may not have to do it all the time, but enough that you can survive and be comfortable. Draw your limit.

If none of these work, try to make the best of your current income. Given that you have somewhat survived to this day shows that you are doing something right. The clue is to find out exactly what you are doing and make it better.

For example, if you are spending at least $100 a week, try to lessen this figure by looking at your daily expenses with a magnifying glass. Do you spend haphazardly on stuff you don’t need? Do you spend that extra $3 on dessert every day? Can you cook instead of buying lunch? Do you spend cash on a subscription that you don’t use? You don’t have to cut these items out of your life, but you can put a limit on your spending. Instead of every day, you can choose two days within the week. Look at it as a reward for not overspending. A little goes a long way.

Try the 50–20–30 Rule

The 50–20–30 rule is a method of getting by and saving yourself from debt. I’ve started to use this method only in February 2018. So far, I believe it’s working, well sort of. For this rule to work, stick to it religiously.

Life has its ups and downs and it’s realistically impossible to follow this method every month since unexpected expenses pop up. If you can follow this rule religiously, then great! If not, switch the numbers to your liking and work from there.

Now, the 50–20–30 rule simply means that you allot a certain percentage of your income to specific categories. According to Forbes, 50% of your cash-flow can go to daily and regular expenses; this can include but is not limited to groceries, utility bills (electricity, water, phone, etc.) and transportation or fuel expenses. Use this figure to take care of fixed expenses you have every month.

20% of your income should go to savings. This can be extended to travelling goals, regular savings or any other financial goals that you may want to set for the future. The remaining 30% should be free-spending; this can be for entertainment and self-care purposes. The reason this figure is higher than savings is that we often not cater for the amount of fun or leisure we intend to have during the month. I think this figure is realistic and can go a long way to keep you satisfied.

At the end of it all, you can always move around the percentage figures to suit your priorities. This is no hard and fast feat and was only created as guidance. You can always find innovative ways yourself to help budget your finances.

Happy Savings! Hope this helps!

This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.

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