Budgeting, planning and saving
In this module, you learned about the 50/30/20 rule and the savings ladder. These two tools will help you reach your financial goals faster. The goal is to start using 20% of your net income to save and invest. The way to do this is to first fill up your emergency fund and only then save and invest for your financial goals.
Assignment
In this assignment, you are going to analyze your situation according to the 50/30/20 rule and the saving steps.
- 50/30/20: After you complete the Fin Fit Tool you can go to the last Tab. The top left will compare your budget to the 50/30/20 rule. If your 'fun expenses' are higher than 30, the key is to reduce it. Not sure why your 'fun expenses' are higher than 30%? In the right column you can find which categories of expenses are higher than those of the average person. See which fun expenses you can reduce to bring this category down to 30%. Then see if you can save on fixed expenses to bring them down to 50% of your net income. This leaves 20% of your net income available for saving.
- Then the savings ladder: At the bottom left you see an overview of your progress on the savings ladder. Is your emergency fund already full? Then it's time to work on your financial goals by saving and investing.