The 50:30:20 Rule.

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Hey my lovely readers,hope your enjoying your week. Mine is a struggle since exams are close and fixed C.A.Ts are taking over my life. Plus this rain just decides to pour whenever it feels like.

So over the weekend I was home and guess what my parents just put for us zuku wifi in the house. The excitement in the house was real no one was leaving the house..lol. And if you live in my country (kenya) you obviously know buying bundles every time is not cheap. They run out so fast.

Back to today’s topic so to entertain myself I was on Caroline Mutoko’s YouTube channel and one of her vlogs was about saving;the 50:30:20 rule. This simply means when you get your earning or allowance if your not working, you break it into this ratio.

50% of the money you get is for your living that is your day to day expenses. Expenses like rent,utility bills, basic expences and what nots. If it happens that your rent is more than 50% of your earnings then there is a problem there. It simply means the other things in your monthly budget will not be well allocated for. Seek some financial advice.

The 30% is money for luxuries. You know that handbag you have been eyeing or that watch. If you like going out then that expense is taken care of in this percentage. This percentage may look small but trust you don’t want  it to reach 3/4 way of the month and start borrowing money for basic things like food and transport to work or school.

20% its the least value but the most important. This percentage is directed to savings.you could be saving for a specific purpose either long-term or short-term. There so many financial and non-financial institutions that can keep or invest this money for you as it earns interest. For example in kenya faulu,jamii bora,chace bank etc. You could also opt to invest in money market instruments like Treasury Bills, Repurchase agreement etc depending on the amount of cash your dealing with.Buying securities is another idea.

Don’t cheat yourself that you will save under your matress chances of you using that money without giving it much thought is very high.

Lets all start saving especially when young. Why wait to save in your 30’s and 40’s when you have tons of responsibility when you can save in your 20’s when all you care about is which drink will I buy ???? Mhh

Share your thoughts,rules and ideas looking forward.

Lots of loveIMG_20151117_203214

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