Monday, July 8, 2024

follow the 50/30/20 rule if you are stupid and want to stay poor

watched a sinkie influenza talk about the 50/30/20 rule

50% spend on needs
30% spend on wants
20% for savings

i tell you up front that this is stupid

only low IQ people should follow this rule, because it is too simple that it does not help 

the correct way to budget is this:
1 spend what you need on needs
2 spend the minimum amount required for yourself to be happy
3 the remainder goes into savings and then investments

there is no ratio
you just overflow into the next bucket

if you earn less than average, you maybe need to spend 70% on needs
if you earn more than average, you maybe need to spend 20% on needs

expenses don't track earnings, unless you are a lifestyle inflation loser

you earn 50% more this month, you spend 50% more on wants? are you a child?
you earn 50% less than month, you reduce you rent/mortgage and day to day expenses by 50%? lol

this is a stupid rule of thumb and it helps nobody while giving misinformation

you spend on needs what you need to spend
you spend on wants in a reasonable manner
you dump all the rest into savings/investments

looking at myself as example
when i realized a lot of capital gains (coz GLK is not a high income worker), how did i allocate it?
5% to needs
15% to wants
80% reinvest

you should not invest anything until your emergency fund is full
only after that, do you "overflow" into investing

this is not difficult or complicated at all

here is my overflow order

shelter
food
utilities
transportation
TERM insurance
emergency fund
enough "wants" so you can continue living life happily
investing
"wants" that are ridiculous, but you no longer worry about money

i consider emergency fund a need, so i fill first before wants

ppl have problems is because they suka suka misclassify WANTS as NEEDS

you NEED to drive a car in singapore?
you NEED to have an annual trip to japan?
you NEED to fly business class?
you NEED to own luxury brands?

lol okay

dont let a internet loser like me tell you that you are WRONG, THOSE ARE WANTS, NOT NEEDS

in that case, maybe one of the reason why i am more financially successful than you is because i am a low-needs person that could overflow a lot into investments and have that larger capital base to snowball for longer

you live your own life

at the end of the day happy, can already

but ill warn you, it is not easy to be happy if money no enough

also dont think that low-needs = making sacrifices / being unhappy
i am a very happy person with a very happy life

just being happy is the real thing that makes sour people jealous

1 comment:

  1. Hi,

    Interesting and thought provoking post you put up. I have to say I agreed with the below three points:

    1. The 50/30/20 rule should NOT be blindly followed. When you earn more, you should be saving more and not blindly follow the rule to spend more!!

    2. Learn to differentiate your "wants" from "needs".  "Needs" are essentials while "wants" are the extras.

    3. "You live your own life". At the end of the day, "happy can already". And "Not easy to be happy if money no enough".

    We need blogs like this once in a while to make us sit up and think!

    I shared your post with my readers here : https://t.me/CPF_Tree/3363

    ReplyDelete