Your Money, Your Rules: The Easy 50-30-20 Budget rule for Every Indian

Hello! Do you sometimes feel like your money goes away too quick? Don't worry - you are not alone! A budget is like creating a map of where your money will go. You get to be in control of your money and not let it control you! A simple way to budget your use of money is the fast and easy "50-30-20 Budget Rule". It defines how to divide your salary (less tax) into 3 parts:

Main three steps of 50-30-20 budget rule

• 50% for NEEDS (Things you have to pay)
• 30% for WANTS (Things you like to purchase)
• 20% for SAVINGS or DEBT (Your safety valve in the future)

The first step of 50-30-20 budget rule is NEEDS: 50% (Half your salary)

These are bills that you HAVE to pay. If you do not pay the bills, there will be issues!

Examples:

- Rent/Ghar ki EMI (Your home loan or rent)

- Bijli, Paani, Gas, Internet Bill (Keep the lights on and your phone running)

- Ration & Groceries (Flour, rice, lentils & some basic cooking)

- Travel Cost (Bus/train fare, petrol for bike/car or auto costs)

- Insurance (Health or vehicle insurance - very important! )

Tip- Needs = "Roti, Kapda, Makaan" + Light, Travel & Health. The basic rule is - if it keeps you alive and safe, it is in this category. 

The second step of 50-30-20 budget rule isWANTS: 30% (roughly a bit less than ⅓ salary)

Fun stuff! You can live without them, but life can feel a little boring.

Examples:

- Eating out (restaurants, Swiggy/Zomato orders, street chaat)

- Entertainment (Netflix/Amazon Prime, cinema tickets, basket ball match)

- Holiday/Trip (Goa trip, visiting village during festival)

- Shopping for fun (new clothes, phone upgrade, mehndi, gifts)

Tip - Wants = "Masti ke paise". Enjoy but don't let this bucket cut into Needs or Savings!

The third step of 50-30-20 budget rule is SAVINGS/DEBT: 20% (1/5 of your salary)

This is YOUR FUTURE MONEY.

- SAVE: for emergencies (hospital, job loss), retirement (after old age), buying land, education of your child.

- PAY DEBT: Pay credit card bills, personal loans, or student loans FAST.

Follow debt rules as debt can destroy your money with high interest!!

Where to save?

- Bank FD / Recurring Deposit (RD)

- Post Office Schemes

- Mutual Funds (SIP) – you can even start with ₹500/month!

- Gold (Digital or physical)

How to start? Simple Steps!

Step 1: Calculate Monthly Salary

Take home salary (remember, tax, PF, etc). If monthly salary changes, use an average.

Step 2: Divide Like This

Category                          %                                            Example (Salary = ₹30,000)

Needs                              50%       ₹15,000 (Rent: ₹7000, Bills: ₹3000, Ration: ₹3000, Travel: ₹2000)

Wants                              30%        ₹9,000 (Food outside: ₹3000, Movies: ₹1000, Shopping: ₹5000)

Savings/Debt                   20%        ₹6,000 (RD: ₹3000, Loan EMI: ₹3000)

Step 3: Keep Track of Every Rupee

- Use a diary or free app such as Moneycontrol, Walnut, or Excel.

- Then write it down daily: "Kitna kharcha hua? Kispe hua?" (What was spent? On what?)

Step 4: Make Adjustments

Are you struggling? Cut out Wants first. Did you get a bonus? Save extra! Review every month.

Special Tips for India

- Festivals & Weddings? Save more money in your budget and don’t touch Needs money, if necessary.

- Family Budget? Make time and sit together to communicate openly about your family's savings and money goals.

- Using Technology: Use apps which monitor and send alerts to warn about overspending in Needs & Wants budget.

- Be Realistic: Can't save 20% of your budget? Try to save 5%!

- EMERGENCY FUND FIRST: No matter what, save 3-6 months of Needs money before taking risks or spending anything on bigger investments.

Final Thought

The 50-30-20 budget rule to personal budgeting is used in the same way as training wheels are for a bicycle. It will teach you about balance and how to concentrate on all areas.

- "Needs" money is to keep you living.

- "Wants" money is for pleasures of life.

- "Savings" money will give you a peace of mind.

Start small and track your expenses for one month to see where your money is going. Take control of your cash, build your future and sleep without money worries!

You can do this - aap kar sakte hain!

Not tomorrow... start today!

FAQ

1. What is the 50-30-20 budget rule?

The 50-30-20 budget rule is a straightforward guideline that says to spend 50% on needs, 30% on wants, and 20% on savings.

 2. How do I figure out what's a need versus a want?

Needs include required expenses like housing, food, transportation, and some medical expenses. Wants are things you don't need, such as entertainment, dining out, and shopping.

 3. Can I change the percentages from the 50-30-20 rule?

For sure! The 50-30-20 rule is just a guideline. You can definitely adjust the percentages based on your financial goals and circumstances.

 4. How do I keep track of my spending to follow the 50-30-20 budget rule?

You can track your spending easily with a budgeting app or a spreadsheet, to track those designated spending limits of 50% for needs, 30% for wants, and 20% for savings.

 5. What do I do if I am above the 50% for my needs?

 You have to figure out how you can cut some expenses (that are not needs) or create more income to follow the 50-30-20 rule.