The 30-30-30-10 rule is a benchmark that helps you save a specific portion of your earnings each month and sets a benchmark for expenses in different essential categories.
To truly incorporate 30:30:30:10 rule into your everyday finance, you need to thoroughly understand the different categories of expenses in this strategy. Let’s decode them for you.
These costs include the expenses you incur to meet the basic human need of shelter. If you are a homeowner, your home loan EMI costs will fall under this category.
All the other essential costs except housing expenses are included in this category. Some common examples of essential expenses that are a part of this group are grocery bills and taxes.
There may be loan repayments or you may have to build your retirement fund which can only be accomplished by savings and investments. And that’s what this category is all about.
The last 10% of your budget is for your wants - or your discretionary expenses. A ticket to the movies, dining out with your family, taking a planned or an impromptu vacation
You want to allocate a sizable portion for your savings and investments. It also separates housing costs from other needs. Moreover it is stricter than most budgeting rules.
It encourages frugal living while simultaneously helping you save aggressively for your future. This is all you need to start building the future you have been dreaming of.