Money Saving Tips: It is a common problem in today’s times that despite having a good income, the pockets become empty by the end of the month. Often we do not even realize that small daily expenses add up to a huge amount. Salary comes, it is spent, and instead of savings, only regrets remain. If you want to balance expenses according to your salary, the 70/10/10/10 rule may prove effective.

What is the 70/10/10/10 rule?

The 70/10/10/10 rule is a simple financial formula that helps you manage your salary better by dividing it into four parts. This rule is not only helpful in controlling expenses but also paves the way for savings and personal growth for the future. Following this rule reduces unplanned expenses and reduces financial stress.

70 percent for daily expenses

According to this rule, approximately 70 percent of your salary should be spent on daily necessities. This includes house rent, children’s school fees, electricity and water bills, groceries, transportation, insurance and other essential expenses. If your monthly expenses exceed this limit, it means you should either cut down on expenses or consider options to increase your income. This part forms the basis of maintaining your lifestyle.

10 percent for long term investment

Set aside 10 percent of your salary for long-term investments. This money is used to meet big future expenses, like children’s education, marriage, home renovation or fulfilling any big dream. Investing in this part keeps you financially secure and avoids unexpected big expenses.

10% for short term savings

Many unexpected expenses may arise in life that you may not have planned for. Medical emergencies, necessary home repairs or sudden travel expenses can put a strain on your financial condition. In such situations, it becomes extremely important to set aside 10% of your salary as short-term savings. This fund saves you from using long term investments.

10% earmarked for loan repayment and personal development.

The final 10% of the amount is allocated to repay debt or invest in personal development. If you have any loan or credit card dues, you should try to repay them with this amount. If you don’t have any debt, this money can be used to learn new skills, take professional courses, or engage in activities that help you self-improve. This amount is helpful in increasing your future earning potential.