Several thumb rules offer guidance on how much of your salary should go toward savings. But let’s face it—life today, with rising expenses and bigger lifestyle goals, doesn’t always fit into those rules. So, how can you tailor your savings strategy to meet your personal goals? Here’s a more practical approach that factors in your income, spending habits, and future ambitions.
The traditional 50/20/30 rule: Why it may no longer work You’ve likely heard of the 50/20/30 rule—the idea that 50% of your income should be to cater to necessities, 20% for savings , and 30% for discretionary spending. It’s simple, but not always feasible. Why? Inflation, lifestyle aspirations, and loans eat into your income much faster today than they did a few decades ago.
Gaurav Goel, Entrepreneur and SEBI-registered investment advisor, points out that many struggle to save 20% of their salary due to several reasons. One major factor is the aspirational lifestyle that people want to maintain. The continuous influence of social media and advertisements encourages spending on luxury items—often beyond what the 50/20/30 rule suggests.
Consider someone earning ₹50,000 a month. After rent, EMIs, groceries, and utilities, they might only have ₹10,000 left. Saving ₹10,000 out of ₹50,000 sounds easy on paper, but what if they also desire the latest iPhone, priced at ₹1.
20 lakh? The temptation to use EMI schemes and purchase them immediately is strong, but this could damage long-term.
