meet the 50 30 20 method for organize your finances, have a more peaceful financial life with this method, see how simple it is.
Most people end up living more intuitively, without well-structured financial planning. This is the reason for so much suffering and constant losses.
Many families don't even have an emergency fund, so they suffer when something happens unexpectedly. And it will happen, the car breaks down, we get sick, we spend money on maintaining something at home.
Anyway, Financial planning is the best way to live a life without suffering, or with less suffering. So, the 50 30 20 method can be a great tool to help you.
Without further ado, let's take a closer look at the 50 30 20 method and find out how it can help you with your finances.
What is the 50 30 20 method?
Firstly, we are talking about income composition, so it is a division of your income into 3 large blocks.
The developer of the method is an American called Elisabeth Warren, a law professor and US senator. Along with his daughter Amelia Warren Tyagi.
We know how important money is in our lives, although it is not everything, it is in everything we do. Whether in maintaining a standard of living, purchasing an asset, or simply purchasing food.
Thus, organizing our finances between income and expenses is what provides us with the peace we seek. Knowing how much we spend and how much we earn shows us exactly where we are.
Where should we invest the 50 of our method?
Firstly, the majority of our income, that is, half of it, should go towards our fixed monthly expenses. In this portion we include housing expenses.
You need to pay rent, or a portion of your house, as well as electricity, water, and IPTU. Here you can enter your food and education expenses as well.
A great way to analyze these expenses is whether they are essential or not, is it possible to cut them? The items mentioned above cannot be cut, we have these expenses every month.
Have a monthly budget where all these expenses are listed so that you can have a complete view of them. Discover the 50 30 20 method for organizing your finances.
Where should we invest the 30 of our method?
In principle, we must spend 30% of our net income on superfluous and variable items, here comes what is not indispensable, but important.
This part will include what you do for entertainment, that is, streaming such as Netflix, Globoplay, in addition to a vacation trip.
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Family outings, lunches at a restaurant, it is worth analyzing how important all these expenses are.
It is necessary to always assess that balance is essential between work and leisure, both are important. However, when one of them is in excess, problems can arise.
Where do we invest the 20 of our method?
Finally, This is where your security reserve comes in, save 20% of your net income every month, this is the best way to live in peace.
Of course I'm talking about saving, but it doesn't necessarily have to be in a savings account. You can make an investment in something with daily liquidity.
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This way, if you need the money quickly, you can withdraw it. The target is to have at least 6 months of your net income in this reserve.
This amount can be used in case of an emergency or sudden unemployment. Invest in a CBD It's a great way to pool that reserve. Target your income at 50 30 20 and be successful.
