Question

This article recommends that 20% of your income is meant for your savings, investments, and payments to reduce debt. What are the potential risks of having all three of these buckets belong in the same category?

Answer 1

The potential risks to having all three buckets belong to the same category and being allocated only 20% of income are as follows:

The 50 : 20: 30 Rule

This recommendation falls short of the personal-finance rule that gives the 50: 20: 30 rule so that the income-earner spends only 50% on necessities and obligations, 20% on savings, and 30% on other things, including debt repayment.

Secondly, if one follows the article's recommendation, the income-earner may not make adequate savings and investments for the future because of debt repayment.

Thus, the recommendation of the article should not adhere. Instead, apply the proven finance rule to enable you to save and invest for the rainy day.

Learn more about savings, investments, and debt payments at brainly.com/question/12198015