40–20–20–20 Rule
Most Important Rule
1️⃣ Save first
2️⃣ Spend later
| Category | % of Income | Purpose |
|---|---|---|
| Needs | 40% | Rent, food, travel, bills |
| Wants | 20% | Lifestyle, entertainment |
| Savings | 20% | Emergency fund, short-term goals |
| Investments | 20% | Long-term wealth (mutual funds, equity) |
Once the emergency fund is fully established, I will redirect that 20% toward investments — bringing my total investment contribution to 40% (20% existing + 20% redirected).
Best strategies
LUMP SUM—>Use it for: