How to Manage Finances 50 30 20 – Are you still confused about managing your finances from the salary you have? Managing finances is not an easy thing, especially if the salary we have is classified as mediocre. Actually there is a method that you can use to manage your salary and finances, namely the 50 30 20 method.
Quoted from Bisnis.com, method 50 30 20 is a method for managing monthly finances. This method was popularized by Senators Elizabeth Warren and Amelia Warren Tyagi (her daughter) in the book All Your Worth: The Ultimate Lifetime Money Plan.
This method is designed to plan expenses and prepare for the future by dividing them into three categories, such as needs, wants, and savings. Still confused? Check out the explanation below!
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Category Financial Methods 50 30 20
The following are the details of each item of expenditure method 50 30 20.
50% for Need
As much as 50% of your monthly income, you can use it for your daily needs or something very important. This includes monthly expenses, such as housing or rent, food, utilities (electricity, water, transportation, etc.), installments, debt, or other things that must be paid each month.
You have to make sure half of your income you use for daily needs. If it turns out to cost more, you have to reduce other expense items.
30% for Wish
Furthermore, as much as 30% of your income you can use to buy things or something you want. Usually this category includes things that are considered unimportant, but are on your list of expenses, such as money for traveling, watching movies, buying new clothes, fulfilling hobbies, and others for your pleasure.
20% for Savings
You must leave 20% of your income for savings and investments. This includes an emergency fund. The main thing you should do is set aside money for an emergency fund and savings.
After that, if you have more money you can use it to invest. It will be useful for your future and long term plans.
How to Apply the 50 30 20 Method?
If you are still confused about how to manage finances 50 30 20, see the following explanation.
#1 Calculate Your Net Income
In applying the 50/30/20 method, the first step you must take is to calculate your income. You need to know your total tax-deductible income. After that, the result of the subtraction will be divided according to the 50 30 20 method.
#2 Divide by Category
From the total net income (tax deducted), you can calculate expenses according to the categories described above.
If you have a salary of IDR 7,000,000 you can divide it into:
50% for needs, which is IDR 4,500,000
30% for wishes, which is IDR 2,100,000
20% for savings, which is IDR 1,400,000
#3 Plan Budget
From the results of these calculations, you can plan your budget in one month according to the predetermined spending limit. Make a shopping list of your needs. If there are still leftovers, you can use them to fill in a savings post.
Keep track and record your spending budget. You must remain consistent in managing your finances according to the predetermined limits.
Managing finances is not an easy thing. There is no one-size-fits-all method or approach. However, you can use this method to start managing your finances.
Also Read: The Reason People Use Online Loans: Why Is It Still Used?
If you are interested in managing finances, you can use the Whiz Financial App.. With this application, you can manage your finances easily and safely.
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