Indian women are playing an important role in not only being a homemaker or salaried employee or investor, but also playing lead roles in startups or leading companies. As International Women’s Day approaches on March 8, let’s take a quick look at the 50:30:20 golden rule that working women can use to channelize their savings.
One of the simplest budgeting methods would be the 50:30:20 rule which usually comes up when managing your money. It generally helps reduce your pay check to three major factors—needs, wants and savings.
According to Preeti Rathi Gupta, Founder, LXME, as a salaried woman, you can follow the 50:30:20 rule, which is the golden rule of budgeting. It’s a good idea to start with allocating 50% of your income to needs, 30% to wants and 20% to savings and investments. You can always customize the percentage according to your needs.
For example, suppose Miss A earns 25,000 per month. Using the 50-30-20 Rule— Miss A will put out 50% which will come approximately 12,500 for essential items. Expenses can be electricity bill, education fee, tuition fee, mobile bill, and groceries etc. 30% of salary will be approx. 7,500 that can be earmarked for ‘wishes’ such as shopping, movies and eating out among others. will be the last 20% which will come to approx 5,000 for savings.
There are ample affordable investment options available in the market such as mutual fund SIPs, equity shares, provident funds, pension schemes and bonds where you can park your savings. Apart from this, the savings can also be used as emergency funds or for other requirements.
Following the 50-30-20 rule, Rathi highlights the following savings tips:
Then chart your goals in terms of ultra-short-term goals (less than 1 year), short-term goals (1- 3 years), and long-term goals (more than 3 years). Based on your goals, you can start investing!
– Start small but start investing and watch the power of compounding work its magic over time.
Start investing for your retirement
Build an emergency fund that is equal to 6-8 months of your monthly expenses as it can help you survive in times of financial crisis.
– “Don’t put all your eggs in one basket!” Diversify your investments across asset classes to manage risks.
– Plan your taxes at the beginning of the year to avoid making unfruitful decisions at the last minute.
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