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It's not about how much you earn, it's about how you use it.

Certified financial planner Paul Roelofse says 30/30/40 is the ideal spending formula to help South African households get their finances in order.

He explains how the 30/30/40 rule works and how to allocate your income wisely after tax.

It's a very simple idea on how one could and should allocate your income.

Paul Roelofse, Certified financial planner

  • 30% allocated to life-changing events and provisions

This includes life insurance, pensions funds and saving for the future. Putting this money away can give you peace of mind, he advises.

  • 30% allocated to car loans, debt, credit cards etc.

Roelofse says debt exposure for any family should not exceed 30% of the household income. Paying this money off can be the hardest part. The expert says this percentage should be a target that all families work towards.

  • 40% allocated to the rest of your living expenses.

This includes groceries, education and other monthly expenses, Roelofse explains.

Listen to the expert financial advice for more:

This article first appeared on 702 : 30/30/40 - the budget rule that'll help you better allocate your monthly income

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