Running Out of Money by Month-End? Know How the 70/10/10/10 Rule Can Help You
Learn how the 70/10/10/10 rule can help you manage monthly expenses, save money, invest for the future, and reduce financial stress with a simple budgeting formula.
Personal Finance: Many people face a common problem every month — salary comes in, but nothing is left by month-end. Rising living costs, EMIs, and unexpected expenses often disturb household budgets. Financial experts say this problem can be reduced by following the 70/10/10/10 rule, a simple and practical money management formula.
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This method helps you plan every rupee in advance, reduce unnecessary spending, and build long-term financial security.
What Is the 70/10/10/10 Rule?
The 70/10/10/10 rule is a budgeting formula that divides your monthly income into four clear parts. It ensures balance between daily needs, savings, investments, and debt repayment.
How to Use the 70/10/10/10 Formula
1. Daily Living Expenses – 70%
Use 70% of your monthly income for essential and unavoidable expenses such as:
- House rent or home maintenance
- Groceries and food
- Electricity, water, gas, and internet bills
- Travel and fuel costs
- Insurance premiums
- Children’s education expenses
This portion helps you maintain your current lifestyle without financial stress.
2. Long-Term Investments – 10%
Set aside 10% of your income for future-focused investments, not for immediate use.
You can invest this amount in:
- Mutual funds
- Retirement or pension funds
- Stock market investments
- Long-term savings schemes
This step helps in wealth creation and financial stability over time.
3. Short-Term Savings / Emergency Fund – 10%
Another 10% should go into short-term savings, mainly for emergencies.
This fund can be used for:
- Medical emergencies
- Sudden repairs or household needs
- Unexpected travel expenses
Having an emergency fund ensures you don’t rely on loans or credit cards during crises.
4. Loan Repayment or Personal Growth – 10%
The final 10% of your income should be used to:
- Repay loans or EMIs faster
- Clear credit card dues
- Invest in skill development or career growth courses
If you are debt-free, this money can help you upgrade skills, pursue education, or improve income potential.
How Does the 70/10/10/10 Rule Help?
This formula gives clarity and control over your finances from the moment your salary arrives.
Key Benefits:
- Prevents overspending
- Builds emergency and retirement savings
- Reduces debt faster
- Encourages disciplined money habits
If your monthly expenses exceed 70% of income, it clearly indicates the need to cut costs or increase income.
A Simple Step Toward Financial Discipline
The 70/10/10/10 rule is easy to follow and suitable for salaried employees, small business owners, and families alike. With consistency, it can help you end the month with savings, not stress.
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