Why You Are Broke by Mid-Month: The "Golden Rule" That Saves Your Salary

Stop Living Paycheck to Paycheck: The 3-Step Formula to Hack Your Net Worth

MUST READ December 6, 2025 | By The Tech Mirror

⚠️ THE QUICK LESSON:

• The Trap: Spending first and saving "later" is why you are broke.
• The Winner (50/30/20): The math-backed rule used by millionaires to stay rich.
• The Backup (70/20/10): The "lazy" version for people who hate tracking details.
• The Fix: Automate the 20% savings the second your salary hits.

You know the feeling. The SMS comes: "Salary Credited."

For about 48 hours, you feel like the King of the World. You order the extra cheese pizza. You buy the premium subscription. You upgrade your shoes.

Then comes the 20th of the month. You look at your bank balance and panic. You are back to eating instant noodles and waiting for the next SMS.

This cycle keeps you poor. It is not because you don't earn enough; it is because you don't have a system. Today, we are going to fix that using the "Golden Rules" of money.

The Gold Standard: The 50/30/20 Rule

This is the framework recommended by top financial experts. It works because it balances your need to survive, your desire to have fun, and your requirement to be rich in the future.

The 3 Buckets:

• 50% NEEDS (Blue): The boring stuff. Rent, electricity, grocery, transport.
• 30% WANTS (Red): The fun stuff. Movies, dining out, new clothes.
• 20% SAVINGS (Green): The freedom stuff. Investments and emergency funds.

Example: Salary 50,000 (Any Currency)

Bucket	% Split	Amount	Where it Goes
NEEDS	50%	25,000	Rent, Bills, School Fees, Petrol/Metro.
WANTS	30%	15,000	Weekend Party, Zomato/Uber Eats, Netflix.
SAVINGS	20%	10,000	SIPs, Stocks, Gold, Emergency Cash.

Why this is the best: It forces you to cap your fun at 30%. It teaches you that you cannot have everything now if you want to be rich later.

The Alternative: The 70/20/10 Rule

Let's be real. Sometimes life is expensive. If you live in a Tier-1 city, your rent alone might be 40% of your salary. In that case, the 50/30/20 rule feels impossible.

The 70/20/10 Rule is the "Realist's Choice." It combines needs and wants into one big pot to make life easier.

The 3 Buckets:

• 70% LIVING: Everything you spend today (Rent + Food + Fun).
• 20% SAVINGS: Non-negotiable future money.
• 10% BUFFER: Debt repayment, charity, or extra savings.

Example: Salary 50,000 (Any Currency)

Bucket	% Split	Amount	Where it Goes
LIVING	70%	35,000	Rent, Food, Movies, Travel (All mixed).
SAVINGS	20%	10,000	SIPs, Investments.
BUFFER	10%	5,000	Paying off that credit card EMI faster.

Why this is secondary: It is riskier. With 70% in one bucket, it is very easy to overspend on "fun" and forget to pay the electricity bill.

The Verdict: Which One Wins?

🏆 The Winner: 50/30/20 Rule

This is the rule you should aim for. It prevents "Lifestyle Creep." When you get a bonus, don't just upgrade your phone. Split the bonus 50/30/20. This ensures your wealth grows as fast as your expenses.

Use 70/20/10 ONLY if: You are in high debt or live in an incredibly expensive area where survival costs are huge.

The "Mango Tree" Logic (Why Save 20%?)

Let's explain this simply:

Your salary is like receiving 10 Mangoes every month. If you eat all 10 mangoes, next month you start from zero. You are a slave to the mango provider (your boss).

But, if you eat 8 mangoes and take the seeds of 2 mangoes and plant them in the ground (Invest them), magic happens. Over time, those seeds grow into trees. Soon, you have an entire orchard giving you free mangoes. That 20% savings is your seed. Do not eat your seeds.

Action Plan: Do This Right Now

1. Log in to your Bank App: Check your exact take-home pay.
2. Calculate the 20%: If you get 40,000, your 20% is 8,000.
3. Automate It: Set a "Standing Instruction" or auto-transfer for the 2nd of every month. Move that 8,000 to a separate account.
4. Forget It Exists: Pretend you only earn 32,000. Adjust your life to fit that number.

Frequently Asked Questions

My salary is too low for this. What do I do?

The percentage matters more than the amount. Even if you only save ₹500, do it. It builds the habit. If you can't save 20%, start with 5%. Just don't save 0%.

Where do I put the 20% savings?

Do not leave it in your Savings Account! You will spend it via UPI. Move it to a Mutual Fund SIP (Index Fund) or a Recurring Deposit (RD) where you cannot touch it easily.

Do loan EMIs count as Needs or Savings?

EMIs are "Needs" because you must pay them to avoid trouble. However, if you are paying extra to clear a loan faster, that extra part counts as "Savings/Investing."

Can I use the savings for a vacation?

No! The 20% is for your long-term wealth (retirement, house, financial freedom). Vacation money must come from your "30% Wants" bucket.