![]() wants differentiation is much less important once you make enough money. In this situation, following the red and green lines down to the 0/0 point at the bottom left of the graph above doesn’t make sense. Similarly, telling you to save 20% runs the risk of making you feel like a failure, possibly leading you to simply give up. You’d hardly let 30% of your limited resources be wasted on wants when you don’t have enough for all your needs! If your income is low relative to the cost of living in your area, I can tell from personal experience (when I first arrived in the US, had a negative net worth, and was earning only $31,000 to take care of a family of 4) that you’ve likely become expert in ferreting out those expenses that you can do without and cutting them back mercilessly. How the 50/30/20 Rule Can Hurt Your Finances When Your Income Is Low In short, it’s another example of something that tries to be one-size-fits-all but ends up being one-size-fits-few-well-most-poorly-and-some-not-at-all.
0 Comments
Leave a Reply. |