By Mukesh Malhotra
One of the questions that I get frequently get asked is, “What is your approach to managing your money – do you have a tip for saving, and do you think rewards for hitting saving goals work?”
I use a simple philosophy called the 50/30/20 rule. I have shared this with my family and friends as it’s worked for me.
Depending on your personal circumstance
a) Use 50% to cover your regular expenses
b) Then use 30% or 20% to cover your incidental costs
c) Then use 30% or 20% to save every month depending on your personal circumstances.
It’s a great tip to list your must-haves and nice-to-haves, an alternative way of looking at this is your emergency and non-emergency funds – those payments which just have to be paid and those which you can buy after a few months of saving. Ideally, I like to save between three to six months of savings as security in case something happened to my job and I make sure not to touch that.
I always look forward to holidays and special celebrations with the family. To me, those are part of my must-haves and I make it a priority once my other essential payments have been paid out.
If you want to go into more detail about the 50/30/20 rule of money, here is a video that explains this concept.
Source: The Legacy Journals
Depending on what you are saving towards, Thamesbank has a wide range of savings accounts to choose from such as the Christmas Savings Account, Child Benefits Savings Account, Holidays and Special Occasions savings accounts and more. You can find out more about the savings accounts here.