The Outstanding 70-20-10 Money Saving Formula (Episode 2)

saving formula
As the famous proverb goes; “The art is not in making money, but in keeping it.” And because keeping your money is such a big deal, I am going to share another painless money saving formula with you. It is called the 70-20-10 formula which can be suitable both for families and individuals, especially students. Well, all you need to do is dividing your net income into the following parts.

70% for living expenses 20% for savings 10% for paying off the debt
House rent Retirement Car loan payment
Groceries Unemployment Student loan
Basic Clothing Vacation Other debts
Utilities New devices
Car Maintenance A new car
Medical bills
 
With a saving formula like this, it’s possible to save both for short-term and long-term goals as well as emergency situations. This formula boasts another benefit. It is flexible in the sense that you can add that 10% to your savings when done with your debt.

The roadmap for spending based on the saving formula

The experts say that the 70-20-10 saving formula can be your stress-free way for saving. Here is a detailed roadmap on how to allocate your net income:
  • Spend no more than 70% of your income on your living expenses. Transportation, maintaining a car, buying food and household utilities and paying the rent can be on this list.
  • The 20% of savings can be divided into three parts. The first 10% you can keep for your retirement goals. 5% can go to your emergency fund. And, eventually, the remaining 5% can be put aside to buy a new car, a new smartphone, or for traveling somewhere.
  • You can use the last 10% of your income to pay a debt. As soon as you pay the more urgent debts, you can pass onto the less urgent ones. At the end, when you have no more debts to pay off, you can add that 10% to your savings.

Some more saving tricks

  • Pay attention to your age. No one and nothing is going to last forever. I understand that young people want to have more leisure time and fun. However, there is nothing more satisfying than knowing there is enough money for some 6 months on your savings account.
  • If you have a minor money issue, do not rush to withdraw money from your savings account. Try to find another solution otherwise, you might end up going bankrupt.
  • Enjoy the little things. Do not be upset for not eating out so often. Sometimes, walking or biking around the town is more fun.
  • Try out a money saving app. There are lots of money-saving apps to help you save painlessly. Looma is one of them. It’s worth trying! You can get early access to the app by subscribing here.

As a conclusion

This 70-20-10 money saving formula is one in the series. If you liked it, start implementing it right away. If you are still wondering what saving formula to choose, you can read our previous article about the 50-30-20 formula. Do not forget to share your bright ideas with us!

Also published on Medium.

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