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Anyone can do it, never worry about “out of pocket”.

According to a 2021 survey of 1,938 people published by The Penny Hoarder, more than half of Americans don’t know how much money they spend every month.

A recent LendingClub report says budgeting helps track expenses, limit unnecessary spending, and protect savings. However, keeping track of expenses consistently isn’t always easy if you’re busy or aren’t proficient with financial management apps.

In that case, you might consider applying the 80/20 rule. You should put 20% of your income into investments, savings or for long-term purposes. The remaining 80% goes towards needs and wants, including food, rent and entertainment. How you spend your money depends on your needs.

No matter how busy people are, they can save money thanks to one simple rule: Anyone can do it, never worry about running out of money - Photo 1.

Artwork: Mint – Intuit

The key part of this rule is that at least 20% of your income goes toward long-term financial goals. For best results, you should set a schedule or alarm to make the money transfer from your main account to your savings or investment account on payday. This way, you won’t forget to save or be tempted to run out of money. In addition, the 80/20 rule is suitable for those who do not want to apply complicated savings tips.

The 80/20 rule, also known as the Pareto rule, was founded by Italian economist Vilfredo Federico Damaso Pareto. In the early 20th century, Pareto used the 80/20 rule to describe the distribution of wealth in Italy, that 80% of Italian property was owned by only 20% of the population.

80/20 is a great start for anyone starting to save money. But it should be the minimum you need to save. The more you save, the sooner your long-term plans will be fulfilled. Once you hit 80/20, raise the savings rate to 70/30, then 60/40. As the amount of savings increases, so do your flexibility and opportunities.

No matter how busy people are, they can save money thanks to one simple rule: Anyone can do it, never worry about running out of pocket - Photo 2.

Artwork: Money Fit

Compared to the 50/30/20 rule, the 80/20 rule is simpler and easier to implement without spending much time. These rules are known as the percentage division method.

With 50/30/20, you need to spend 50% of your income on essential expenses such as rent, food, electricity and water… 30% towards desires such as travel, shopping and entertainment. The remaining 20% ​​is used to save and invest. Categorizing your spending categories can be time-consuming. Sometimes, it is difficult to determine exactly what the purpose of spending money is.

According to CNBC

https://cafef.vn/nguoi-ban-ron-den-may-cung-co-the-tiet-kiem-tien-nho-1-quy-tac-don-gian-ai-cung-lam-duoc- no-nonsense-lo-chay-me-20220528110634723.chn

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