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In the financial sector, the 50:30:20 formula is widely popular for allocating monthly income. This approach involves spending 50 percent of one's monthly income on household necessities—such as rent, utility bills (electricity and water), and daily consumables—allocating 30 percent to lifestyle expenses and entertainment, and dedicating the remaining 20 percent to investments. Now, Chartered Accountant (CA) Nitin Kaushik has proposed a slight modification to this 50:30:20 formula on the social media platform 'X'. According to Kaushik, if one allocates their monthly income in accordance with his revised formula, it could potentially yield higher returns on investments over 10 years.

**What CA Nitin Kaushik's Formula Entails**
CA Nitin Kaushik has introduced a minor tweak to the standard 50:30:20 formula for monthly expenditure. Kaushik has retained the core principle of the original formula, which allocates 50 percent of monthly income to essential expenses such as rent and daily necessities. However, he has made a significant alteration to the 30:20 split. While the traditional formula suggests spending 30 percent on lifestyle and entertainment, Kaushik emphasizes *saving* that specific amount instead. Conversely, where the traditional formula advocates for saving 20 percent, Kaushik proposes allocating that portion to lifestyle expenses and entertainment.

**The New Formula Will Boost Savings**
Let us assume an individual has a monthly income of ₹100,000. According to the traditional formula, they would spend ₹50,000 on rent, utility bills, and daily necessities. Another ₹30,000 would be spent on lifestyle and entertainment, while ₹20,000 would be allocated to investments—including options such as SIPs, mutual funds, or other investment instruments. Under the new formula, the 50 percent allocation for essential expenses remains unchanged. However, the savings component increases to ₹30,000, while the expenditure on lifestyle and entertainment is reduced to ₹20,000.

**How ​​to Achieve Higher Returns**
In his post on 'X', CA Nitin Kaushik explained: "Let us assume an individual is earning an average annual return of 12 percent on their investments." Under the old formula, an investment of ₹20,000 per month over a period of 10 years would yield a total return of ₹46 lakh for an individual. In contrast, according to Kaushik's formula, a monthly investment of ₹30,000 over 10 years would result in a return of ₹70 lakh. This implies that by strictly adhering to the new formula—and making an additional monthly saving of ₹10,000—the individual would receive an extra ₹24 lakh after 10 years.

**How ​​to Follow the New Formula**
CA Nitin Kaushik also offers suggestions on how to implement his new formula. Kaushik advises that to follow this method, an individual should open two additional zero-balance accounts linked to their primary salary account. On the very day the salary is received, the funds should be transferred from the primary account to the additional accounts to prevent unnecessary spending. An automated transfer setup can also be configured for this purpose. Ensure that all your expenses are paid exclusively from the primary account. Kaushik explains that when the money is no longer visible in the primary account, you will be unable to spend it.

Disclaimer: This content has been sourced and edited from Dainik Jagran. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.