Mastering your finances: The 50/30/20 budgeting for secured financial goals

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financial goals, which may lead to postponing spending money on enjoying life today. Instant gratification involves spending money on enjoying life today, which may lead to pushing back investments for financial goals. Many people get caught between instant and delayed gratification and cannot decide which one to go for.

The best option is to take a balanced approach that involves a mix of both. The 50/30/20 budgeting provides a balance between enjoying today and securing future financial goals. Let us understand how.

It is a budgeting method that involves allocating your income towards your expenses (needs and wants), savings, and investments in specific proportions as follows: You can allocate 50% of your income towards needs. These are necessary expenses that can’t be avoided or compromised. Some of these expenses include: a) Groceries b) House rent c) Loan EMIs, credit card outstanding, insurance premiums, etc.

d) Medicines e) Children education fees and other related expenses f) Transport expenses g) Utility bill payments h) Any other non-negotiable expenses All the above need-based spending are essential for survival. You can allocate 30% of your income towards wants. These are discretionary or lifestyle expenses.

While they are not essential like wants, you can incur them to enjoy life. Some of these expenses include: a) Movies and other forms of entertainment like sports, OTT subscriptions, etc. b) Travelling, vacations, etc.