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The 75–15–10 rule, a fundamental guideline in finance and budgeting, serves as a strategic framework for managing income. Often applied in personal finance, this principle allocates percentages of one’s earnings to distinct financial priorities: 75% for living expenses, 15% for saving, and 10% for debt repayment or investing.
Primarily, the rule underscores the importance of maintaining a balanced financial lifestyle. The largest portion, 75%, is designated for essential expenses, encompassing housing, utilities, groceries, transportation, and other necessities. Adhering to this allocation prevents overspending and ensures one’s primary needs are met without straining their finances.
The subsequent 15% is earmarked for savings. This facet serves as a crucial pillar for building financial security and stability. It includes contributions to emergency funds, retirement accounts, or other long-term savings goals. By consistently allocating a portion of income to savings, individuals cultivate a safety net against unforeseen expenses and lay the groundwork for future financial milestones.
The final 10% focuses on debt repayment or investing. For those grappling with debt, allocating this portion toward paying off loans, credit card balances, or other outstanding liabilities accelerates the journey toward financial freedom. Conversely, for individuals…
