50:30:20

50:30:20 is the magic equation for financial stability. Let me elaborate,k.

50% of ur pay shuld go to the NEEDS category; bills, car loans, house loans,parents allowance and study loans should be under this heading. I know most are either think of/getting a new house but make sure that ur house loan is a third of ur pay and u shuld have saved up 10% of the value of the house that u want to buy. Example if ur aiming for the rm 200k - 250 K price range,u shuld have at least have rm 20 -25 K in ur bank acc. Although,in Budget 2011,we don't need to fork out the 10% for the loan but we need to have money for renovating the house.

30% of ur pay shuld go to the WANTS category. This category is for items like movies,eating out,luxury items and etc. If ur thinking of buying a Monet,use the money from this portion.

Lastly, the 20% is for SAVINGS. This is super important cos this portion will help u to overcome the uncertainties of life such as medical fees, unemployment and etc. U also could use this portion for investment. For beginners, I would advise to invest in Govt. Bonds or ASN or BSN. This type of investment have the lowest risks and ergo the lowest profit. For ppl who have solid background in investing,its better to put your money into them but pls don't put all in one basket. The key is to diversify ur investment.


Citation: Reader Digest Oct 2010