Inflation is rising like never before. That is why it is important to invest money in assets that have the potential to generate high returns. Some investment strategies can not only help save money if used properly in these uncertain times but can even make one a millionaire.

If you're finding it difficult to manage money, the 70/30 rule is a simple formula that you can adopt to make it easier. This rule is easy to follow, but very effective. Because it is not based on a particular number, but based on a percentage. As a result, you can use this rule even if your income changes over time.

What is the 70/30 rule?

The 70/30 method: According to the 70/30 budgeting method, you should be able to cover all expenses with 70% of your income. This includes various expenses such as rent, food, shopping, recurring bills, travel, and other expenses. The remaining 30% should be used for investment. This is the 70/30 rule. For example, suppose you have an income of one lakh rupees, use 70,000 rupees for expenses and 30,000 rupees for investment.

70% of the cost

To prevent overspending and ensure financial stability, the 70% that is set aside for expenses should be managed wisely. Let's take a look at how to cut costs by 70%:

Requirements (50-60%) Essential expenses such as housing, food, transportation, healthcare, insurance, and utilities.

Out-of-pocket expenses (10-20%) include meals, entertainment, shopping, vacations, and hobbies.

By keeping essential expenses within a reasonable percentage, individuals can maintain a comfortable lifestyle while avoiding financial hardship.

30% of the investment

30% returns should be invested wisely to maximise financial security and growth. Let's look at a commonly used method.

An emergency fund (10%) sets aside funds for unexpected expenses such as medical emergencies, car repairs, or job loss. At least 3 to 6 months' worth of expenses should be included.

Set aside retirement savings (10%) for a retirement investment, such as a 401 (k) IRA, or pension fund, to ensure long-term financial stability.

Investments and Wealth Building (10%)Invest in stocks, bonds, mutual funds or real estate to build savings over time.

For debt holders, a portion of 30% can be set aside for debt repayment, preferably for high-interest loans to reduce the financial burden.

Advantages of the 70/30 rule

There are many benefits to the 70/30 rule.

• Simplifies budgeting: Budgeting is made much easier by having an accurate percentage allocation structure.
• Encourages savings: By setting aside 30% on a regular basis, individuals get into the habit of saving and investing.
• Prevents overspending:Limiting expenses reduces the chances of living beyond one's means.
• Improves economic growth: Investment ensures long-term wealth accumulation and financial security.

The 70/30 rule is an effective and practical personal finance strategy that helps individuals split income for spending, saving, and investing. By following this rule, people can ensure financial stability, build wealth, and achieve long-term financial independence. Adjusting it according to personal circumstances allows for greater financial success and security in the future.