Do you find it difficult to save your money?
You are not alone. Many people struggle with saving, regardless of how much they earn. It’s not uncommon to meet someone with a substantial income, yet still, find themselves living paycheck to paycheck.
Why? Often, it boils down to spending habits—many tend to spend more than 50% of their salary on “wants” rather than “needs,” leaving little to nothing for savings.
This problem may sound simple but in fact there are still many people struggling in saving.
No matter how much you earn, some spent most of their income and left with nothing at the end of the month.
Does this sound familiar to you? I have met someone earning RM 30,000 per month but still need help to save. Why? Their spending habit of spending more than 50% of their salary on their ‘wants’ but not on their ‘needs’. The scariest part is everything accounted for savings.
Have you ever heard of the 50-30-20 saving rule? It is a very simple yet effective guideline for managing your finances and achieving your savings goals. Let’s break it down in this thread.
Let’s say you break them down into:
1) 50% is for your needs
2) 30% is for your wants
3) The remaining 20% goes into your saving
50% for Needs: The first chunk, 50%, is dedicated to covering your essential needs. This includes rent/mortgage, utilities, groceries, transportation & other necessities. By allocating half of your income to these expenses, you ensure stability and security in your day-to-day life.
30% for Wants: Next up, 30% is earmarked for your wants or discretionary spending. This category covers non-essential expenses like dining out, entertainment, travel, and shopping. It’s important to indulge in these luxuries responsibly while still staying within your means.
20% for Savings: Lastly, 20% of your income should be directed towards savings and financial goals. This portion can be divided further into emergency savings, retirement contributions, debt repayment & long-term investments. Building this financial cushion ensures peace of mind and paves the way for a secure future.
Do you think you can follow the 50-30-20 rule? My advice is to follow it for a few months and you will find it effective. You can thank me later.
If it works, don’t forget to guide your family and friends too!