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How To Spend Your Salary Wisely In 2023?


January 16, 2023 ( Newswire) Poor money management is a problem that many young, ambitious professionals, who are trying their best to live the city life, struggle with. If you find yourself in a similar situation, the 50/30/20 rule of budgeting may be able to assist you to get your sluggish finances back on track. This guideline is for you if you are unable to keep track of your spending and what you spent it on. The fundamental principle behind this rule is to analyse your after-tax income and split it in such a way that all of your necessities, wants, and savings are justified. Let's examine this rule and how you might apply it to your day-to-day activities. Continue reading!

What is the 50/30/20 Rule?

The 50/30/20 rule is a fundamental budgeting method that can help you manage your money effectively, plainly, and sustainably. The general rule of thumb is to allocate 50% of your monthly after-tax income to needs, 30% to wants, and 20% to savings or debt repayment.

You may make better use of your money by consistently maintaining a balance between three key areas of expenditure. You can also save yourself the time and frustration of going into the specifics every time you spend by keeping track of only the three main categories.

How Does The 50/30/20 Rule Work?

STEP 1: Calculate monthly income

Assume Person A receives Rs. 50,000 in this bank account each month.

STEP 2: Categorize spending

To adhere to the 50:30:20 rule, divide the total money you have into three categories. For Example:

TOTAL IN-HAND: 50,000 Rs.

NEEDS: 50,000 /100 x 50 = 25,000 Rs.

WANTS: 50,000/100 X 30 = 15,000Rs.

SAVINGS: 50,000/100 X 20 = 10,000Rs.

STEP 3: Monitor expenses

It's essential to monitor your expenditures each month and change the budget as necessary.

Decoding 50/30/20 Rule

You are required to divide your in-hand money into three equal portions. 30% of income is spent on wants, 50% on needs, and 20% is set aside for different types of investments. You will have established buckets for everything and be working inside each bucket's permitted limitations if you do this. This will help you develop discipline while ensuring that you don't sacrifice the standard of living or your long-term planning.

Needs: 50%

Needs are the things you need to survive or must accomplish to survive. Needs are obligations you must fulfil to live peacefully. Examples include purchasing food and groceries, paying rent or a mortgage, paying insurance premiums, paying off the bare minimum of debt, and more. This rule states that you can utilise half of your after-tax income to pay for things that are constantly on your list of essential expenses. If you don't make these payments, you'll either get into problems or find up with greater debt for the next month, likely with interest added for the late payment.

Wants: 30%

Wants are the comforts that money can purchase, as the word suggests. Simply said, these are aspirational goals rather than necessities for fundamental survival. Wants are items that you enjoy having, such as occasional dining out, movie dates, leisure trips, seasonal shopping, splurging on grooming products, hobby lessons, etc. As you can see, the list of "desires" is never-ending and, if unchecked, can also consume one's savings.

A shopping fund will make it simple for you to accumulate the necessary corpus without having to pay a sizable sum all at once. Therefore, you can start saving for that iPhone by setting aside some money in liquid accounts rather than using the EMI way. You can invest in a liquid fund for six months to attain the desired amount, using (about) 1 lakh as the money you need to purchase the most recent iPhone.

Another suggestion is to research costs across other websites, especially during sales and off-seasons, to see if you can find the same item for less money. To fulfil your needs, you can also hunt for used items in brand-new condition. Therefore, all that is required to balance the " Wants " bucket is for you to plan your purchases rather than giving in to your desires.

Savings: 20%

The savings account is what will get you through the future while necessities and wants take care of your well-being in the here and now. Perhaps the most crucial bucket is the one that receives the least attention.

According to the 50-30-20 rule, 20% of your post-tax income needs to be saved and then put to use through investments. Please keep in mind that, in contrast to requirements and wants, saving should always be a top priority. If it means you have to put the boys' trip to Leh on hold for the time being, so be it. Everything can wait, but your savings and assets absolutely cannot.

SIP will provide disciplined investing, preventing you from deviating from your objective. It goes without saying that SIP is the greatest approach to investing in equity mutual funds because it avoids the worry of market timing and is easy on the wallet. Additionally, SIP makes use of the power of compounding, which over time allows modest contributions to grow into a sizable corpus.


When your lifestyle is successfully managed and stabilised, you can strive to put more money into the savings component. The rule can therefore be expressed as follows: 50% for needs, 20% for wants, 30% for savings, etc. You can always modify this rule to fit your needs, but you must make sure that at least 20% of your post-tax income goes toward the savings portion. The 50-30-20 rule will enable you to exercise caution in your financial dealings and make sure that all of your money is not simply gone. Once you are aware of the wealth inflows and outflows, you will have more control over how you want to spend your money and thus become more conscious of your spending patterns.

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