Budgeting doesn’t have to mean spreadsheets and guilt. The 50/30/20 rule is a simple starting point that works for most households.
How it works
- 50% — Needs: rent or home loan, groceries, utilities, transport, school fees, insurance and minimum loan payments.
- 30% — Wants: eating out, shopping, subscriptions, entertainment and travel.
- 20% — Savings and debt repayment: emergency fund, chit instalments, deposits, investments and extra loan payments.
An example
On a monthly take-home income of ₹40,000, that’s roughly ₹20,000 for needs, ₹12,000 for wants and ₹8,000 for savings.
How to start
- Write down your take-home income.
- Go through last month’s spending and sort it into the three groups.
- Compare with 50/30/20 and find the group that’s furthest off.
- Make one small change this month — you don’t need to fix everything at once.
- Pay yourself first: move the savings amount out as soon as your income arrives, instead of saving “whatever is left”.
Adjust it to real life
If your rent is high, needs may be 60% for now — and that’s fine. The point isn’t perfection; it’s knowing where your money goes and deliberately putting some of it toward your future.
This article is for general information only and isn’t financial or legal advice. Chit fund rules differ from state to state, so always check the requirements that apply where you live.