As we enter a new month, many salaried individuals find themselves in a situation where they are struggling to make ends meet due to numerous responsibilities and outstanding debts. This often leaves little to no money left for savings each month.

If you want to avoid living paycheck to paycheck, have savings, and be able to pay for housing or transportation without too much stress, it's essential to manage your finances effectively. You can achieve this by using the 50-20-30 formula, which divides your income into three parts.

First Portion: 50 Percent

This portion is the amount deducted from your regular income for daily living expenses, including housing payments, transportation, and food. All of these should fit within the first 50 percent (for example, if your salary is 15,000 baht, limit this expense to 7,500 baht).

Second Portion: 20 Percent

This portion is for savings and financial goals that should grow over time, such as purchasing a life insurance policy that accumulates cash value, investing in funds, or at the very least, paying off credit card debt. Being debt-free from credit cards will give you a better foundation for saving compared to someone burdened with debt (if your salary is 15,000 baht, set aside 3,000 baht for this).

Third Portion: 30 Percent

This portion is for treating yourself, as it is reserved for discretionary spending after accounting for necessary expenses and savings. This could include travel, movies, concerts, buying various items, or hanging out with friends (if your salary is 15,000 baht, allocate no more than 4,500 baht for this).

Overall, this financial planning formula strikes a balance that allows you to manage your money effectively, leading to a happier life without debt, while still having some savings and the ability to indulge occasionally.

SOURCE: www.tonkit360.com