If you are going through a financial crisis, personal loans can be a temporary solution to get you out of trouble. However, it is important to have a good savings capacity to face any eventuality with your own capital, thus avoiding paying interest and other expenses.
In case you’re wondering how to really save money at home , we encourage you to take a look at the 50/20/30 Rule .
This is a money-saving tactic that works, but it requires being very specific with planning and changing our habits.
To learn everything about this rule, keep reading:
What is the 50/20/30 Rule and how to save money at home with it?
The 50/20/30 Rule is based on studying and dividing monthly expenses into different percentages. To find out how to save money at home with it, we must know what each of them corresponds to:
- 50%: This percentage of our income should be used to cover our primary needs .
- 30%: We can use the corresponding amount to treat ourselves, although it is better to have a margin in case we need it.
- 20%: Finally, we will use this percentage to save for the future.
The best thing about this method is that it is not only considered a resource for saving money at home, but it also allows for efficient control without it being a torture. The only thing we have to do is follow the formula of expenses – income = total savings to make the relevant calculations.
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Key Tips for Applying the 50/20/30 Rule
If you’ve decided to try everything to find out how to really save money at home, the 50/20/30 Rule may be for you. Although you already have everything you need to start working on it on your own, here are some tips that will make it easier:
The 50/20/30 rule is a popular guideline to help people manage their money effectively. The rule suggests that at least 50% of your monthly income should go toward essential expenses, such as housing, food, and transportation. 20% should be allocated toward savings and investments, and the remaining 30% can be used for discretionary expenses, such as entertainment and vacations. Here are some tips for following the 50/20/30 rule:
1. Make a budget
The first step to following the 50/20/30 rule is to know your income and expenses . Make a detailed budget of all your income and expenses and categorize them into the essential categories, savings and investments, and expenses.
Many of our daily expenses are made unconsciously, so we never write them down.
Don’t hesitate to check your bank account to make this list. If you usually pay for things in cash, it’s best to keep a small notebook to keep track of where your money goes.
2. Prioritize essential expenses:
Remember that 50% of your income should be allocated to essential expenses , so it is important to prioritize them.
This means that you will have to evaluate what your biggest expenses are. Once you are aware of them, you will have to look for ways to reduce them.
- For example, if you are paying a high rent, you can try to talk to your landlord to reduce it.
- If you’re eating out a lot, it’s time to moderate and eat more at home.
- One of the ways to save money at home is to cut down on any subscriptions you may have active. This is money you can’t afford to lose right now.
3. Create a savings plan
20% of your income can be used to treat yourself, although it is more than advisable to dedicate it to savings and investments.
Create a detailed savings plan to ensure you are saving a sufficient amount each month. Consider creating an emergency savings account and investing in a retirement plan.
Now that this plan on how to save money at home really works, it is important to control yourself, but you cannot live in discomfort either. In case you need a break in your daily life, remember that you have 20% of your budget that you can dedicate to giving yourself a little treat.
Being too strict with saving will not help you achieve your goal, but rather the opposite.
4. Control discretionary expenses
Discretionary expenses are a problem, as they are considered the first enemy in your goal of saving money at home. We are talking about that money that disappears without us even realizing it, and the reason for this is that they are usually closely linked to our self-esteem (they usually give us pleasure when we buy something).
The remaining 30% of your income can be used for discretionary spending, such as entertainment and vacations. However, it’s important to monitor these expenses to ensure you don’t stray too far from the 50/20/30 rule. Consider setting a monthly budget for your discretionary spending and try to stick to it.
5. Use automatic tools
An effective way to ensure that you are saving 20% of your income is to automate the process. Automation tools are an effective resource for how to save money at home , as it only depends on you at first and then you can forget that they are active.
Set up a portion of your income to be automatically transferred to a savings account each month. Your bank may allow you to create wallets where you can accumulate these savings.
This way, you won’t have to worry about manually transferring money every month.
Follow these tips and you’ll see how to save money at home . The 50/20/30 rule works very well as a savings method, you’ll just have to adapt some of your habits to get the most out of it.
