What important financial rule do most people break? - Letsdiskuss
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Anonymous

Posted 24 Jun, 2019 |

What important financial rule do most people break?

Avichal Singh

Project Manager at The Economic Times | Posted 15 Aug, 2019

People often spend more than they earn, which leaves them surviving on paycheck to paychecks. Probably due to rise of social media, we are forcing ourselves to make needless expenses merely to look better than others.


Let me explain this with and example. Assume you logged on your social media account to find out that one of your friends has bought a new car. Another one is going abroad for vacation. One more friend is chilling with family in a new house, while others are may be munching a 5-star hotel and so the list goes on and on.

Now after watching this, you might also plan something for you no matter it is needed or not and then this will become a never-ending binge. This will leave you with no money left and probably you will be stuck in a never-ending debt trap.

The important rule for Budgeting is 50/30/20, where you are asked to save 30% of your income after tax. While you can use 50% of your money for the needs like groceries, housing, utilities, health insurance, car maintaining etc.

30% of the money is on your discretion, which you must use to fund your hobbies and eating out etc.