Personal Finance Rules: Which One Do You Use?

[Shaf]

Like other aspects of life, there are rules that people have come up with over time about personal finance to help them save better and have better and balanced finances.

One of these is the 50/30/20 rule. If you want to use this, you will have to divide your after-tax income into three parts of which 50% goes into catering for your needs, 30% is for your wants and 20% is for savings or repaying debt.

Another rule is the 70/20/10 rule. This works by dividing your after-tax income and spending 70% of it on living expenses, 20% on debt repayment and 10% of it on giving or debt repayment.

Another rule is the 80/20 rule. Like the others, it advocates keeping 20% aside as savings and spending 80% on living expenses
I personally use the 80/20 rule since I have no loans to pay back.
One thing with each rule is that it works but you must create the discipline to stick to it in the long run.

 

[moonchild]

I will definitely opt for the 80/20 rule, I won't actually describe myself as the saving type because I have close countless month in the red, living expenses are a big part of where my finances go, I live in Nigeria and the cost of living is over the roof, almost all the commodities in the market prices have quadrupled and it is taking toll on every adult out there, it's crazy when what you used too buy at a certain price has added a whooping margin of 100% in a day.

Even though I am not an advocate of savings, I believe that it is getting harder to every day because of the cost of living and people are barely getting by, sticking to any type of a saving rule demands enormous discipline, as you have to learn to ignore your cravings if you want it to work for you effectively

 

[Mika]

My favorite rule is the rule of 50/30/20. When you follow this rule, you do not have to sacrifice anything for the sake of a good financial future because you will also have 30 percent of your income to spend on your wants and wishes. When you follow this rule, you will also have money for investment because when you continue to save 20 percent of your income for some time, you will have some money with you that you can use to make an investment. The rule of 80/20 is also more or less good because you will also be saving 20 percent income and sometime later use your saving for investment. However, the major problem with this rule is your expenses tend to be high, spending 870 percent of your income to maintain your life is too much. You need to keep your spending on essentials below 50 percent.