50% for your needs
It is recommended that 50% of net income be allocated to needs. It is therefore your duty to be honest with yourself and establish what is a need and what is not (frequent beers at Sat are not but they will not be neglected for all that).
The following could be considered as needs: rent, transportation (fuel for vehicle or SBB pass), food, debt payment (monthly fee) .
30% for your wants
A generous share is allocated to good living. After all, one must also enjoy and please oneself [while remaining reasonable], you might say! That's right!
Within this 30%, you will plan :
vos escapades, vos voyages, votre nouveau téléphone, vos soirées, votre abonnement Netflix et bien d’autres.
However, we will have to remain consistent and try to stick to it. If it happens that your needs exceed 50%, it is wise to draw from your 30% wants.
20% for your savings
Finally, we won't forget your piggy bank! We will have to fatten it nicely. The problems of the present (needs and wishes) having been solved, we will now consider the unforeseen of the future. It is recommended to think about saving in the following way:
- To ensure, a emergency fund :
the ideal would be to reach the equivalent of 6 months of expenses. This fund is intended to help you during periods of non-employment or struggle.
- Create a 3rd pillar account for retirement (more about this in the next article).
- Have savings for any unforeseen event (e.g. broken car, broken phone...)
Eventually a part of these savings is not destined to stay and snore in an account. Investment is a solution to fructify for the most courageous. Prudent people may opt to invest in a high-yield savings account.