You have a choice in life either use money management for your daily and monthly expenses or just throw your hands in air and say you will live neck to neck looking out for sources and asking others to lend you money when some unexpected expenses crop up for you in life. Money management is not rocket science and can be mastered with practice only. Initially you need to make some conscious efforts to make sure that you are saving enough for your future needs. Later on this will become an attitude and you will have enough not only for the rainy day but also for some investment that you are looking forward.

50:20:30 money management principle works for all

Money Management for a comfortable life

Money Management with 50/20/30 Principle

Irrespective of the fact how much you are earning every month or every year this money management principle will work for one and all. Even if you are fresh college pass out or have reached your late forties you can start utilizing and reaping the benefits of this principle today itself. Salaried or business class all people can budget their monthly or yearly expenses thus creating a sense of financial security for themselves in the long run. This principle is especially easy to follow since you don’t have to break your budget into numerous small categories. It can be implemented classify your expenses into 3 major categories and work your finances accordingly.

Fifty Percent needs to go for the essential expenses

Whatever you earn has to be spent for expenses that are essential for your survival. These expenses cover housing, transportation, utilities and groceries. These expenses should be 50% of your monthly earnings. You need to keep these expenses under 50% for better money management in life. If your earning does not support a car or a home in an upscale area don’t worry use public transport and look for shelter where real estate prices are not too high. These measures will help you in keeping your monthly essential expenses below fifty percent.

Savings needs to be a priority with at least 20 percent for effective money management

These saving are over and above the tax contribution and your 401(k) contribution that is deducted from your salary itself. This money needs to go in for a stronger financial foundation that you are building for yourself. Invest this money towards your retirement contributions, savings and any debts that you need to pay for yourself. These expenses should be met after meeting the essential contributions and before moving on with any other expenditure.

The rest 30 percent can go in for lifestyle choices

Once you have made your payments for essential expenses and savings its time to look at the other expenses, which include your gym fee, cable, internet, childcare, hobbies, pet care, personal care, restaurant bills any expense that does not come under the purview of essential expenses and savings. Spend on them the rest 30% of your salary every month.

Following good money management tips and tricks in life is a sure shot way to lead a comfortable tension free life where you do not have to worry about your daily expenditure and any unexpected expenses that may crop up in life.

 

Leave a Reply

Your email address will not be published.