There is a common rule for budgeting hard earned money. This is the 70-20-10 rule. Depending on the explanation and inclusion on each parts, the main objective is to help and to guide you allocate your money wisely.
Let’s start with the 70%. This should be used in paying your monthly expenses such as food, clothing, utilities, bills and other things that you are paying regularly. Payment for shopping, new gadgets and even luxury vacation should be taken from this portion. In case you have excess of this portion, try to add it on your 20% part. Especially if you are single with less expenses.
As for the 20%, this should be allocated for your savings and investment. For most Filipinos, they only think of bank when they heard about these terms. Though bank is a good way to save money, it is not adviseable for investment. Due to the fact that at the end of year, you will end up losing money thru inflation. You can think of other investment vehicles like stocks, mutual funds, insurance, real estate or other related things. It doesn’t mean that you are obliged to make the 20% as fixed amount. If you have excess money from your 70%, it is then advisable for you to put it on this part of your budget. Investment can have a long term return. Thus, always make sure that you have enough money for 6 to 12 months expenses that you can use aside from the money that you have invested for long term.
Remaining 10% can vary base on each person. For some, they will use this as thites for their churches. While for some, they will allocate this amount to be given in various social causes. It can be for charity, a tuition fee for your sponsored child or even your help to anyone in need. As long as you spend it for the good and benefit of other people. However, as I have said, this vary from person to person. While it may work for, it doesn’t mean that you should also follow. Choose something that bests suits your needs and circumstances.
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