2. Make use of the 50/30/20 allocation rule: 50% of your income allocation should go to taking care of essential expenses and immediate needs. The mistake people often make is neglecting this aspect, forgetting that it is actually inevitable and unavoidable, even when you manage to avoid it today, it'll come back tomorrow bigger, and you'll be forced to still sort them out, thereby messing up your plans. 30% goes to your discretionary income and the other 20% towards your savings and also for debt repayments.
Adopting the DCA strategy as guide was totally resourceful to me,though the 50%,30% and20% could be adjustable depending on personal priorities at the moment,investment requires nothing but determination so that the end result will turn out juicy,sometimes circumstances could change the initial plan to 40%,40%,20%,this is where I totally advice investors to focus on initial decision and be determined to survive outside the investment so that one's result wount fluctuate when others are rejoicing.
There are some problems with the division, and sure it could be possible that we could elect to have our basic expenses to be somewhere in the ballpark of 50% of our income, and once we figure out what our basic expenses, then the rest is discretionary income.
Portions of our discretionary income that we allocate towards debt servicing is not discretionary income, that is part of basic expenses.
With our discretionary income we can choose to invest (save), or consume. Each of us can figure out how much of our discretionary income we want to allocate to each of these.
Most people are not going to have 50% of their income as discretionary income, so 50% is pretty high. many will fit somewhere in the ballpark of 10% and 30%.
You are actually right and I agree with these points. Firstly, the 50%, 30% and 20% division may not work for some people due to high expenses demand and or the level of income that comes in. We know that expenses varies alot. Mr A might be spending a whole of 70% of his income on expenses while Mr B might just be needing 45, 50% or there about to clear up weekly of monthly basis needs, and offcours we know that this has a whole lot to do with how far you were able to clear or provide for previously and also the level of income that comes in weekly or monthly. However, everything boils down to your level of income. A high level of income earner can work with that division formula, not even always because at times expenses can increase as I explained earlier, while on the other hand, a low income earner will find the 50% discretionary worrisome and may not work with it comfortably.
So what really matters is getting to actually know what your expenses might be, or surely will be before the right discretionary can be discovered and allotted. And secondly, in picking out our discretionary, we shouldn't be too desperate or greedy in a bid to increase our accumulation speed over night by allocating big percentage to the discretionary income which in turns increases your accumulation without properly settling your basic needs and much needed expenses, because if this is done in any was, would hunt you within the week or month of such rash decision.
So I think individually, investors should check their possible income, determine there sure expenses and from it do there division to suit all sides and ensure peaceful living and accumulating simultaneously. It very clear that the formula that works for Mr A may not work for me
I totally agree with this point because no one’s financial life is the same. If you don’t fully understand your real expenses, it’s easy to set targets that you cannot meet up. Building a balance between covering needs and slowly growing investments like Bitcoin is safer than rushing in with percentages that are not realistic.. In the long run, steady progress with a clear view of your income and expenses will always give better results than forcing yourself into a strict formula, So I agree with you.