Thoughts

The 70:20:10 Budget Rule

February 22, 2021

Have you been following the 70:20:10 budget rule when it comes to your personal finance?

For working professionals, salary is often the main income stream.
The 70:20:10 budget rule explains that you should spend MAXIMUM 70% of your income and put the rest into saving and investment.

The spending is including all the fixed and unexpected expenses, such as mortgage, grocery, utility bills, loan interests, holiday, take out etc..

If the balance of your saving is not enough to cover 12 months of your household expenses yet, 20% of the income should go into saving. The remaining 10% goes into investment.

If you have already built up the saving buffer, you can afford to invest 20% of the monthly income and save just 10% instead.

This is a very simple principle for personal finance management, but it’s very powerful to ensure your personal financial wellbeing, if you follow it consistently on monthly basis.

Are you spending too much?
Are you saving and investing enough?
What do you find the most challenging in this process?

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