Sunday, December 12, 2010

Saving Skills # 4: More MAGIC Rules

If you're like most people, and you have trouble with the psychological aspect of saving, one way you might be able to bypass this obstacle is by setting specific limits for yourself.

Introducing...The 50/30/20 rule. Simple and effective.
The rule states that:
50% of your income should go to your NEEDS
30% of your income should go to your WANTS
20% of your income should go to your SAVINGS

But it only works if you remember: NEVER under ANY circumstances dip into your savings for a want.

It's that simple.
And it really works. Experts say that by saving at least 20% of your income, you'll be able to build up some decent savings over time. These savings, of course, you'll want to keep in a savings account. (More on different types of bank accounts and interest coming up!)

The hard part, though, becomes determining what is a NEED and what is a WANT. Watch for our next edition of Saving Skills!

1 comment:

  1. But at our age many of our needs (though it depends) are covered by our parental units