We all have our own mental models when it comes to spending money. We also have to form the models for investing money too. Take an example where we have our first salary and we barely save it. Instead of spend it on the things that hurt us on financial scale later.
When it comes to the financial stabiltiy we have to think of the model before we want to achieve our goals. I am assuming that you are tryihng to spend money and also earn along the way. And that has made many like yourself lose sleep over which model to follow.
Here's one such formula I am discussing and maybe that also work out for you. Give this one a try and let me know.
60 Percent Expenses and Spending
Let's take an example. You earn 1000 USD and you have some expenses. Like say paying bills and also paying for variety of the things that would be causing you some worry if you don't pay them on monthly basis. So you tend to pay for those bills. Like grocery, light, food, water, and other stuff for which you need to do the daily expenses. And this is something unavoidable.
Like you can't skip the food, water, clothes and other family expenses. In such case you have to think of the proper spending. And when you can do the spending by holding those 60 percent. Why? because unless you have additional income sources coming in, you have to hold larger amount of money for the paying for the expenses.
40 Percent Investment
Once you are paid with bills and all the essentials. You should be holding onto that 40 percent. Divide that into the stocks, mutual funds, real estate and other investment you wish to do. So here say if you want to buy crypto you can do or you should choose to do that. And when it comes to 40 percent you would be able to make investment as if it would pay off your future expenses.
So the dividend stocks is one such where you can earn the monthly dividend. Like you are going to be earning the mutual fund returns you have to consider doing that for longer term like till your old age. And which means you have to keep on diverisfying the investment into the stocks. If you can pull that off then the financial stability would be possible.
You can pick your own numbers. Point at the end is the financial stability. If you can pull that off with your own numbers sure that would work good.
