ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -At least 20% of your income should go towards savings. Meanwhile, another 50% (maximum) should go toward necessities, while 30% goes toward discretionary items. This is called the 50/30/20 rule of thumb, and it provides a quick and easy way for you to budget your money.

Detailed explanation-2: -“Save 10 percent of your income.” You can decide on your own personal rule to live by that works for your financial situation. Putting away some money on a regular basis-even if it’s a small amount-can help you manage unexpected expenses and emergencies and reach your financial goals.

Detailed explanation-3: -Ideally, financial experts like to see a DTI of no more than 15 to 20 percent of your net income. For example, a family with a $250 car payment and $100 of monthly credit card payments, and $2, 500 net income per month would have a DTI of 14 percent ($350/$2, 500 = 0.14 or 14%).

Detailed explanation-4: -The idea is to divide your income into three categories, spending 50% on needs, 30% on wants, and 20% on savings. Learn more about the 50/30/20 budget rule and if it’s right for you.