Allocate 50% to needs, 30% to wants, and 20% to savings & investments. We adapt this global rule to Indian income patterns and tax structures.
50% for Needs
These are your essential expenses. Think rent/EMI, groceries, utilities (electricity, internet), insurance premiums, and basic transportation. If your needs consume more than 50%, you might need to downsize your lifestyle or find ways to increase your income.
30% for Wants
Life isn't just about paying bills. This category covers dining out, entertainment, vacations, shopping, and hobbies. It's the flexible part of your budget that makes life enjoyable.
20% for Savings and Investments
Pay yourself first! This chunk should go towards an emergency fund, retirement planning (EPF/PPF/NPS), and wealth creation (Mutual Funds, Equity). As your income grows, aim to flip the 30% and 20% categories—saving 30% and spending 20% on wants.