As soon as your salary is credited on September 1, try this rule; it is easier than 50-30-20! It will help you save as well as have fun

The financial rule for saving and spending is 50-30-20. But many people are not able to follow this rule. In such a situation, here we are telling you a rule that is much more practical than this. You can follow this easily. With this, you can save and also fulfill your hobbies.

Usually, it is said to follow the rule of 50-30-20 for salary management. But the rule of 50-30-20 sounds as good as it is difficult in real life. For many people whose salary is not very high, it becomes very difficult to save 20% every month.

In such a situation, this rule cannot be followed and then by the end of the month, all the calculations go wrong and hands are left empty in the name of savings. If the same happens with you, then today we are going to tell you about a new and practical formula for making a budget, which is easy and really works. This rule is - 15-65-20. Follow this rule as soon as your salary is credited today on 1st September. Know about it here.

Why does the 50-30-20 rule fail?

This rule often fails because:

Savings at the end: This rule says that after all expenses, save 20%. But the reality is that nothing is left by the end of the month.

Impractical percentage: For people living in big cities, essential expenses like house rent, children's fees and EMI take up 60-70% of the salary. In such a situation, it seems impossible to fulfill the needs in 50%.

The hassle of constant tracking: It is very tedious to divide every expense into 'needs' and 'hobbies'.

This is the new 15-65-20 rule: savings first, expenses later

The biggest and most powerful principle of this rule is - 'savings first'. It just slightly inverts the 50-30-20 rule, making it much more effective.

How this rule works-

15% (Savings and Investment): As soon as you get your salary, before spending anything else, first set aside 15% of your salary for savings or investments (SIP, PPF, RD). This is your first EMI for your future.

65% (Needs): Now spend 65% of the money left on your essentials. This includes your house rent, loan EMI, ration, electricity-water bills, children's fees and transport expenses.

20% (Hobbies): And finally, you can spend the remaining 20% on your hobbies without any tension or guilt. This includes things like eating out, traveling, shopping, watching movies.

Understand with an example

Suppose your monthly salary is Rs 50,000.

15% (Savings): As soon as you get your salary, first set SIP or RD of ₹7,500 (15% of 50,000) on auto-debit. Now forget about this money.

65% (Needs): Now you have ₹32,500 (65% of 50,000). With this money, pay all your important bills and EMIs.

20% (Hobbies): And finally, you are left with ₹10,000 (20% of ₹50,000). This is your 'fun money'. You can spend it however you want, without thinking, because your savings are already done.

Frequently Asked Questions (FAQs)

1. What if I can't save 15% of my salary?

No problem! You can start with 10% or even 5%. The important thing is to develop the habit of 'saving first'. As your income grows, you can increase this percentage.

2. What if my needs are more than 65%?

If your needs are more than 65%, it is a sign that you need to re-look at your expenses. You may have to cut down some of your 20% 'hobbies' portion and put it into needs.

3. Where should the 15% of the money saved under 'Savings First' be invested?

This depends on your goal. For long-term goals (like retirement) you can do SIP in equity mutual funds. For short-term goals you can invest in RD or liquid funds.

4. Does this rule work for every income group?

Generally this rule works for everyone. But if your income is low then you can adopt the rule of 10-70-20 instead of 15-65-20, whereas if the income is high then you can adopt the rule of 25-55-20. The basic principle is of 'savings first'.