ECONOMICS
BUDGETING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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50% on flexible expenses, 20% on financial goals, and 30% on living expenses and essentials
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50% on living expenses and essentials, 20% on financial goals, and 30% on flexible spending
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50% on financial goals, 20% on living expenses and essentials, and 30% on flexible expenses
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50% on financial goals, 20% on flexible expenses, and 30% on living expenses and essentials
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Detailed explanation-1: -What is the 50/30/20 Rule of Budgeting? The 50/30/20 rule of budgeting is a simple method that helps you manage your money more effectively. This basic thumb rule is to divide your post-tax income into three spending categories – 50% for needs, 30% for wants, and 20% for savings.
Detailed explanation-2: -The rule is very simple in practice. It asks you to break your in-hand income into three parts. 50% of the income goes to needs, 30% for wants and 20% to savings and investing. In this way, you will have set buckets for everything and operate within the permissible amount for each bucket.
Detailed explanation-3: -Because the 50-20-30 rule is a simple budgeting concept, it can be a good choice for people who are new to creating a personal budget. The percentages can be easy to calculate or plug into any spreadsheets you already use for your financial information.
Detailed explanation-4: -Notably, the general idea of the 50/30/20 rule is simply to split your monthly income, excluding income tax, into three major categories which should include 50 percent for expenses, 30 percent for wants, and 20 percent for savings/investments.