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This formula divides your salary into four parts 40%, 30%, 20%, and 10%. Its purpose is that you spend your monthly income in such a way that every area gets due importance and you do not have to face a financial crisis in any situation.

First of all, spend 40% of your salary on needs. These include house rent or home loan EMI, ration, children's fees, electricity-water bills, and transport. These are expenses that are essential and cannot be compromised.

Then comes 30% for desires. That is expenses related to your lifestyle like eating out, watching movies, shopping, or traveling. These are related to your happiness, but it is important to keep them limited so that the budget does not get spoiled.

After this, the most important thing is to keep 20% for savings and investment. As soon as the salary comes, this part should be set aside. You can invest this money in SIP, mutual funds, PPF, or other investment options. This money will become the basis of future security.

Finally, save 10% for contingency expenses or emergency funds. This money can be used for sudden expenses in a month, medical needs or any necessary repair, etc. This will save you from the need to take a loan or borrow money.

For example, if your salary is Rs 50,000, then spend 40% i.e. Rs 20,000 on needs, Rs 15,000 on desires, Rs 10,000 on investments, and Rs 5,000 on contingency needs.

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