Many young Indians follow the 50-30-20 rule, thinking it’s the only sensible way to manage money, but a new perspective is shaking things up. CA Abhishek Walia, founder of Zactor, says this popular formula simply doesn’t match real Indian expenses, especially when rent, family responsibilities, and early financial commitments take up a big chunk of income. His take on what actually works for today’s earners has triggered a massive discussion online.
CA Abhishek Walia explained on LinkedIn that the traditional 50-30-20 model was built around American living costs, where rent is reasonable and financial independence starts early. In India, the reality is very different. Rent alone can swallow 35–45 per cent of income. Many people support parents. Kids’ education, insurance, and retirement planning start far earlier than in Western countries. Walia said this is exactly why the old rule fails most young earners.
What is the 20-30-40 rule?
Instead, he suggested the 20-30-40 breakdown as a more realistic foundation. According to him, about 20 per cent can go toward lifestyle spending such as outings, festivals, and weekend plans. 30 per cent should cover the bare essentials like rent, groceries, utilities, and travel. The biggest shift comes with the 40 per cent bucket, which he believes should be dedicated to building wealth and protecting the future through SIPs, emergency funds, life and health insurance, children’s education plans, and even retirement savings for those still in their twenties.
He also added a separate 10 per cent category for learning and skill development through courses, books, and certifications. He said this is one of the few expenses that increases earning potential instead of draining savings.
Walia stressed that EMIs only help people maintain their lifestyle, not grow their wealth. Investments grow wealth, and skills open new opportunities. He called his method more of a mindset shift than rigid math. He said young earners should treat money as a tool to protect the people who depend on them and to make their future safer than their present.
CA Abhishek Walia explained on LinkedIn that the traditional 50-30-20 model was built around American living costs, where rent is reasonable and financial independence starts early. In India, the reality is very different. Rent alone can swallow 35–45 per cent of income. Many people support parents. Kids’ education, insurance, and retirement planning start far earlier than in Western countries. Walia said this is exactly why the old rule fails most young earners.
What is the 20-30-40 rule?
Instead, he suggested the 20-30-40 breakdown as a more realistic foundation. According to him, about 20 per cent can go toward lifestyle spending such as outings, festivals, and weekend plans. 30 per cent should cover the bare essentials like rent, groceries, utilities, and travel. The biggest shift comes with the 40 per cent bucket, which he believes should be dedicated to building wealth and protecting the future through SIPs, emergency funds, life and health insurance, children’s education plans, and even retirement savings for those still in their twenties.He also added a separate 10 per cent category for learning and skill development through courses, books, and certifications. He said this is one of the few expenses that increases earning potential instead of draining savings.
Walia stressed that EMIs only help people maintain their lifestyle, not grow their wealth. Investments grow wealth, and skills open new opportunities. He called his method more of a mindset shift than rigid math. He said young earners should treat money as a tool to protect the people who depend on them and to make their future safer than their present.
