Let’s Decode Personal Finances for Gen Z: The 50-30-20 Rule
Month-end is nearing? What a bummer! And these endless cravings to order from your favourite food joint? Argh!! Bad combination. Raise your hand, if you have often raged over ‘month-end days’ to the extent of absolutely despising it!
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Personal Finance
- Swati Tripathi
- 2022-12-10
- 03 min read
#financial planning
#money saving

Many of us have fallen prey to the vicious cycle of earning, (over)spending & going penniless every time the end of the month knocks at our door. But hold up, this time we are here with the best money saving plan to help you manage your personal finances. The digital world is full of wonders. It has brought nearly every service to our fingertips- from buying food to buying groceries, from paying rent to paying loans- everything can be accessed within minutes without travelling a mile. But with great convenience comes great consequences!

The new world has empowered us with ‘Buy Now, Pay Later’, ‘Easy EMIs’ & various such options through credit cards which are undoubtedly helpful, but when irresponsibly used, can grapple with the same month-end woes. Ultimately, putting a halt to our plan of being financially independent.

To counter such situations, we recommend you to follow the 50-30-20 budget rule-

Personal Finances Rule

NEEDS = 50%

Needs include the expenses that are one hundred percent necessary, and something that you can’t go without. It could be your phone bill, home rent, conveyance, college fees, groceries etc. These are the unavoidable expenses & cover the necessities that one would compulsorily require. It also gives an estimate of the surplus amount that would remain after your most important expenditures.

Also Read: 5 ways to start your journey to financial independence at the age of 18

Personal Finances Rule

WANTS = 30%

Wants include all the non-obligatory expenses. In simpler words, these are the things that make your experiences better, add luxury or leisure to your life like Netflix, gym, mall dinners, shopping etc. If your Wants ratio currently exceeds the Needs, then you must chuck out some of the non-essentials and switch to frugal ways to balance your personal finances. Having a fulfilled lifestyle is everyone’s dream, where the list of wants is always expanding. Our personal finances often succumb to our inflated lifestyle, thus one must be mindful and not mistake a want as a need while spending!

Personal Finances Rule


Your savings include the stash that helps you meet your future goals or emergencies, whether it is to buy your first two-wheeler, invest in crypto, plan a trip with friends to Goa, or meet any unforeseen or unfortunate circumstances. Savings are most ignored by a Gen Zer who believes it has an age-bar! Whereas, your savings act like a safety net that you can always count on and take a flight through the unforeseen situations.

Also Read: 8 money saving hacks that you need right now

The best money saving plan is to opt for an investment plan that suits your pocket and helps you meet your long & short term goals. If you aim to be financially independent, savings should be your first weapon to battle out financial discrepancies.

How to be financially independent?

  • 1: Note the average amount of money you receive or are credited with each month.
  • 2: Categorise your average spending by charting out your past month’s expenditures. This will give you an idea of how many expense categories you have, for e.g., food, utility bills, entertainment, travel etc.
  • 3: Realistically evaluate your expenses into the 50-30-20 rule, i.e., categorising into Needs, Wants & Savings.
  • 4: List your expenses as per your priorities.
  • 5: Now that you have listed the least priority expenses, try slashing them out for a few weeks, if you are not matching the 50-30-20 budget rule!
  • 6: Practise and check if you still struggle during month-end days.
  • 7: If not, add one leisure at a time back into your expenses!

In conclusion, following a balanced expenditure plan like the 50-30-20 rule will empower your due-diligence. Having a mindful attitude towards your cash inflow and outflow will help you create wealth from an early stage and make financial planning your superpower!

Also Read: How to Quickly Repay Education Loan


Q1. What should I include in my budget?

Your budget should be an accumulation of three things
1) Unavoidable expenses
2) Experiential expenses
3) Investments & savings 

Q2. How much do I save for emergencies?

Start off by saving 10% of your monthly budget exclusively for emergencies. It is said that, “a high-yielding savings account is the best option for emergency funds with easy accessibility & a good interest rate.”

Q3. Which investment plan should I opt for?

There are many investment plans in India that can help you create wealth. If you’re salaried, you can opt for a PPF or PF, which over time can yield a great compound value.

Q4. Do I need to have insurance?

Insurance gives you financial security. Some of you have begun your financial journey, and to have insurance coverage from an early age will provide a great financial relief as you grow old.

Also Read: How to Read a Job Offer Letter



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