Money management tips everyone can follow to save big

Ever had times when you doubted if your bank balance would see you through till the end of the month? Do you often find your finances derailing and wonder where all your hard-earned money went? You're not alone. Many people are prone to poor money management, and if you are one of them, it is time you take control of your financial situation!

The basic rule to being financially solvent is to start saving money mindfully. One of the famous budgeting rules is called the ‘50:30:20 rule’ and can be really useful in allocating your after-tax income without having to stretch your finances.

Let’s take a look at some cardinal money management tips and the ideal mix of savings.

What is the 50:30:20 rule?
 

The 50:30:20 rule says that 50% of your income should go towards fulfilling basic needs, 30% should go towards wants, and the remaining 20% should be put aside as savings. However, this is not set in stone. If your finances allow you to save a larger percentage of funds each month, go ahead and do that.

Let us break down the 50:30:20 rule in detail below:

• 50% towards needs

Your needs include expenses that you absolutely must make to survive and sustain. Your electricity bill, gas bill, groceries, rent, insurance premiums, etc., are some prime examples of such needs. Utilise almost half of your post-tax income to defray your most important needs.

• 30% towards wants

This section is your wish list – every expenditure translates into pleasure or wants. Examples include dining outside occasionally, going for a movie, taking a foreign trip, pampering yourself at a salon, or taking up a hobby. These indulgences are nice to have but not essential for survival, so you should spend on them judiciously. Going overboard will leave you with fewer funds to allocate towards saving money. This is one of the best money management tips.

• 20% towards savings
  

This is perhaps the most understated and ignored section but deserves the most attention. Your emergency savings will see you through tough times, the COVID-19 pandemic being a recent case in point. Wondering how much money can be deposited in a savings account every month? Ideally, 20% (or more, if possible) of your income should be diverted into a savings account and invested in profitable avenues. This is non-negotiable and should take topmost priority, even above your needs and wants, to guarantee a stress-free future.

How the 50:30:20 rule can help you achieve your financial goals

 

The 50:30:20 rule shows you how to manage money and provides a yardstick to know exactly where and how much money you are spending. You get a clear picture of your needs, wants, and saving potential. This way, all your financial goals will be met as you ensure a seamless flow of funds towards important expenses.

In conclusion
 

IDFC FIRST Bank understands your budgeting and long-term wealth creation goals and offers some useful products keeping in mind your financial needs. An IDFC FIRST Bank Savings Account offers interest credits on a monthly basis, which adequately serves your income and investment requirements. It also offers an attractive interest rate.  You can also get money management tips from dedicated Relationship Managers. Reach out today and open a savings account with IDFC FIRST Bank!

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.