Many people say that the 50-30-20 rule of money can help you to make rich. Unfortunately, they are not telling you the whole picture if you don’t use the 50-30-20 rule in the right way it can make you poor seriously.
Let’s have a look at what we are going to see in this video
What is the 50-30-20 rule
Flaws of the 50-30-20 rule
The 50-30-20 rule is the wrong formula if you are poor
Now 50-30-20 rule says you will divide your income into three parts 50% in needs, 30% in wants, and 20% in saving and investing.
I hope you got it after looking at this you will say fantastic this is great but hold on this is not the whole picture you need to think practically you need to see the positive and negative and then come up with any point.
Disadvantages of the 50-30-20 rule
- First of all this formula is not suitable for people who are poor and also rich.
What… what are you saying?
Yes before you say anything watch the complete video
First case poor people.
As you also know if you are struggling for your livelihood how can you survive with 50% of your income for needs?
Every investing and saving will only work for you when you will be healthy. If you cut or stop your needs. You can’t live your life in a healthy manner. I hope you are getting what I am trying to say. So this 50-30-20 rule will not suit you seriously if you have a low income. You can try by yourself if you don’t believe me.
Second case rich people.
Many people are too rich that you can’t even imagine. Tell me one thing if any rich people want only 10% of their needs so why they will spend 50% of their income on needs? Before you confused yourself for example a guy who earns 20000 $ per month ok his needs expense is around 5000$ per month. So in this case he will only allocate 25% for needs and I think you got the point.
If you conclude the first point you will get to know that most people can’t even apply the 50 30 20 rule might some of you can do.
Do you know there is a problem with this you will say now what.
So for this let’s jump into the second point.
Many people have lots of debt if you look at the 50-30-20 rule 50% goes into needs 30% in wants and 20% in saving and investing not tell me from where you will pay the debt.
For a better understanding, I will take three conditions. First condition if you don’t have debt then no problem you can use this formula. Second condition you have to stop saving or investing or want and repay debt and the third condition is to do some side hustle to earn more money.
If you see the first condition people can use the formula.
If you want to use the second condition that means 50 30 20 rule will not work every time and the third condition if you do that you won’t need the 50-30-20 rule.
You will say now why my dear friends if you work and also do some side hustle there is a high probability that you will make a good amount of money so you don’t need this 50-30-20 rule you make your own formula on the basis of your earning.
Well, if you struggle with money and if you are still thinking to make use of 50-30-20 don’t use the formula because this is the wrong formula if you are poor. If you see the allocation 50-30-20 rule that 30 is not for you. Tell me one thing if you are struggling with money why do you want to spend your money on wants? Listen if you don’t spend your money on wants still also you can live your life happily the only thing you want to do is instead of wasting that money on wants you can use that money for your needs or saving or investing.
Don’t unnecessarily make yourself poor by following any rule. I accept this is a good budget rule but for those who can apply not for those who don’t need this rule. If you want watch the video again and think.
If you still think that 50-30-20 rules can apply in your life you can happily implement them in your life. I am not stopping you I had talked about what many people are not talking about rest is in your hand do your own analysis before putting money anywhere I highly suggest that.
Do you know that 9 out of 10 people make these 25 mistakes might too are doing this read the article money is bad article.