Budget Hacks - Part 2

The 50/30/20 rule with a twist

Hey there, savvy budgeters and future financial wizards! 🚀

Today, we're diving deep into a financial strategy that we discussed in last week's newsletter that is about securing a stable future while keeping those dreams alive. Now Imagine you're getting an annual 10% income increase. Exciting, right? Now, instead of applying the same old 20/30/50 rule to your new income, let's flip the script and watch the magic happen. 🪄✨

First things first: your needs shouldn't balloon by 10% every year. No, sir! We're all about keeping our needs in check, so they stay on the lower end. 📉 After all, it's called "needs" for a reason!

So, when that glorious 10% increment lands in your bank account, here's the deal: take that incremental amount and park it at 50% in your investment account. Yep, you heard it right! Invest it in the future. Meanwhile, take 20% to cover your needs.

But wait, we're not touching the 30% allocated to desires. Those little luxuries are your motivation fuel – don't skimp on them!

Now, buckle up because the fun part begins. As you keep allocating 50% of your increments to investments, your investment column will grow from 20% to 25%, then 30%, and beyond. Meanwhile, your needs column will gently decrease from 50% to 45%, 40%, and so on. 📈📉

Here's the beauty of it all: your needs aren't being slashed. They increase, but only by a modest 20% of the incremental value. This way, they stay comfortable without skyrocketing.

Now, let's talk about that investment. If you faithfully invest at this rate for a solid 10 years and assume an average annual return of 10%, guess what? Your invested amount effectively doubles in value! That's the magic of compounding, folks – turning your money into a wealth-building machine. 💰💰

We've got a handy spreadsheet for you to fill in the numbers and witness the financial fireworks for yourself. 📊✨

Hope you're as thrilled as we are about this financial adventure. Keep budgeting, keep investing, and watch your wealth grow. Remember, the journey to financial independence is a marathon, not a sprint!

Stay tuned, because next week, we'll dive into more tips and tricks on how to become financially independent. See you then! 👋🌟

Thank you for being part of our financial journey!