The dangers of following blindly the so-called personal finance rules

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THROUGHOUT the years that I have been studying personal finance management, I have come across a number of rules of thumb that one must adhere to maintain a stable financial well-being.

However, based on my experience and observations of others, while these rules are not applicable to everyone, they can serve as a decent starting point.

My candid response was a “No,” and outlined why this could pose a concern in the future for people who passionately and blindly follow such “rules” from fin-influencers. As in the case of my client, their budget allocation does not even meet this criterion. Considering their current financial goals, the proportions they have to establish were as follows: less than 50 percent for their “Needs,” significantly less than 30 percent for their “Wants” and more than 20 percent for their “Savings.

Some financial formulas are still sensible, such as keeping debt obligations to no more than 30 percent of one’s salary to ensure that the person or family has enough financial resources to cover the periodic loan payments.

 

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