It’s important to choose the right retirement savings plan for you and your financial situation. To help you choose the best option for you, outlined below are the best way to save for retirement – without even knowing it in 2023
50/30/20 rule
What is the 50/30/20 rule?
This is a rule that helps you strike a balance and set guidelines for allocating your monthly budget accordingly. This rule helps in creating a savings mind set while ensuring that there is money for enjoying life too. Let’s face it life is short and should be enjoyed so there is need to ensure this by striking a healthy balance.
This rule splits your monthly income among three main categories. Here’s how it breaks down:
Monthly after-tax income. This figure is your income after taxes have been deducted. It’s likely you’ll have additional payroll deductions for things like health insurance (NHIF, NSSF, HELB contributions or other automatic payments taken from your salary. Don’t subtract those from your gross (before tax) income. If you’ve lumped them in with your taxes, you’ll want to separate them out — subtract only taxes from your gross income.
50% of your income: needs
Necessities are the expenses you can’t avoid. This portion of your budget should cover required costs such as:
• Housing.
• Food.
• Transportation.
• Basic utilities.
30% of your income: wants
Differentiating between wants and needs isn’t always easy and can vary from one budget to another. Generally, though, wants are the extras that aren’t essential to living and working. They’re often for fun and may include:
• Monthly subscriptions.
• Travel.
• Entertainment.
• Meals out.
20% of your income: savings and debt
Savings is the amount you keep away to prepare for the future. Devote this set of your budget to paying down existing debt and creating a financial cushion to fall on in case of emergencies.
How, exactly, to use this part of your budget depends on your situation, but it will likely include:
• Starting and growing an emergency fund
• Saving for retirement individual retirement account.
Paying off debt.
Conclusion
When it comes to saving for retirement in 2023, there are a number of different options available to you. Make informed financial decisions while exploring this options and while at it don’t forget to enjoy life too.
Read more blogs here: https://viraleflare.com/
