It's not about how much you earn, it's about how you use it.
Certified financial planner Paul Roelofse says 30/30/40 is the ideal spending formula to help South African households get their finances in order.
He explains how the 30/30/40 rule works and how to allocate your income wisely after tax.
It's a very simple idea on how one could and should allocate your income.— Paul Roelofse, Certified financial planner
- 30% allocated to life-changing events and provisions
This includes life insurance, pensions funds and saving for the future. Putting this money away can give you peace of mind, he advises.
- 30% allocated to car loans, debt, credit cards etc.
Roelofse says debt exposure for any family should not exceed 30% of the household income. Paying this money off can be the hardest part. The expert says this percentage should be a target that all families work towards.
- 40% allocated to the rest of your living expenses.
This includes groceries, education and other monthly expenses, Roelofse explains.
Listen to the expert financial advice for more: