Pizza and 50-30-20 Budgeting Rule? A Money Hack that can ease your spending habits..
Want to know a money hack? Let's take a cue from a concept popularized by Elizabeth Warren in her book, "All your Worth : The Ultimate Lifetime Money Plan.
“If your after tax income looked like this cheesy (Omg, I need one right now) Pizza, then you need to allocate your money as follows - 50% on Needs, 30% on Wants, 20% on Savings
What are Needs?
“Needs are things needed for your survival. Eg : Rent, Electricity bills, Insurance, Health Care etc”
What are Wants?
“Wants are not so essential, but things you'd like to spend your money on. Eg: Netflix, Dining at a restaurant, PIZZA, Movies etc”
And, needless to say SAVE the remaining 20%
CA Shikha Rao says....
“Just as having only 30% of that Pizza slice (occasionally) will keep us fit, spending only 30% on "WANTS" will keep us FINANCIALLY FIT!
Well if I were to the creator of this rule, I think I would categorize PIZZA as "NEEDS". Right?
What should you do next?
The next pay check is around the corner. I suggest you spend some time this weekend trying to analyse your previous month expenses and classifying those into Needs and Wants, to see how you can do better? Get started :)