50-30-20: The golden rule of managing your finances
MANILA, Philippines — Financial literacy and freedom are among the phrases that get thrown around a lot. To young and earning adults, these aren’t just words but obligations that need concrete actions.
And just like with most things, it’s always best to start early. Thankfully, young adults are not completely left in the dark. There are many life hacks that can help them get through. One of which is the 50-30-20 method.
The 50-30-20 method is popularized by Elizabeth Warren, US Senator and bankruptcy expert from Harvard, in a landmark book All Your Worth: The Ultimate Lifetime Money Plan. It is one of the most popular ways to manage one’s income. If done right, then it can be the best tool to secure financial health.
In the 50-30-20 method, your salary range doesn’t matter. The main rule is to simply divide your net income into three main categories: needs, wants, and savings.
Below infographic shows how it works:
The 50-30-20 method can help you allocate your finances effectively, while guiding you on how to save for your future. The key is to stay focused and disciplined.
Here are additional tips to further help you track your finances:
1. Track through tech
Take advantage of technology. Expense tracking apps are everywhere, and it’s high time you use them to aid you in your money-saving endeavor.
Know where your salary is going as you go through the days before the next payday. Now, you have no excuse for whining about petsa de peligro.
2. Take stock of what you have
Cover your bases neatly by looking closer at everything you own. Lay them out in front of you and decide which one is worth keeping a-la KonMari style.
For example, examine your shopping wishlist. Do you really need another pair of sneakers? Do you really need that new blush? Asking these simple questions will put things in perspective.
3. No to fear of missing out (FOMO)
A casual browse through your social media, which teems with curated travel and food photos, may leave you with FOMO. Don’t let it get to you. Calm down and get to the bottom of your unnecessary desires.
Instead of FOMO, why not examine the joy of missing out. If you are creative enough, you will figure out ways to be contented, and even entertain yourself along the way. Peer pressure is so 2000s.
4. Education is edgy
There is no shame in admitting financial ignorance. What’s shameful is doling out your hard-earned cash and then complaining where it has gone. Being smart and savvy about your money is what should win in the end.
If you’re having difficulty learning about these things on your own, then conferring with financial advisors who know their stuff is the way to go. Let’s make financial literacy stylish in 2019.
5. Open a bank account
Now that you have a better attitude about your finances and savings, especially with the help of Warren’s 50-30-20 budgeting method, the next step is opening a bank account.
Indeed, your #FinancialGoals2019 shouldn’t just be a list that you write out at the start of the year. It’s something that you should follow through.
Metrobank can lead you through the rest of the way. With over 900 branches locally and internationally, Metrobank can help you set up your own bank account this year, without hassle or worry because you're in good hands.
Think you’re ready to try the 50-30-20 rule? Open a Savings Account or Checking Account at Metrobank.
