Rules of expenditure and investment

Thumb rule for expenditure and investments

The rule is very simple, 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.

Difference between needs and wants

Needs : A need is something that is needed to survive. A need is that it is necessary to sustain life.

Wants : A want is something that an individual desires, but would be able to live without. Yes, there is an overlap of products being used for needs and wants.