This rule suggests allocating 50% of your after-tax income to essential needs, such as housing, utilities, and groceries. The concept behind the main split is that “Needs” encompass expenses necessary for survival and basic well-being. Savingsin simpler terms, means setting aside money for future use instead of spending it all right away. It’s like putting money aside for a rainy day or for something important that you want to achieve. For example, savings can involve setting money aside for unexpected expenses, vacations, down payments on a home, retirement, and building a safety net.

Source: Forbes June 27, 2023 00:16 UTC