Question

What are the potential risks of having all three of these buckets (savings, investments and debt payments) belong in the same category?

Answer 1

The potential risks that these three groups fall into the same category is that it is a low percentage and it is not a realistic proposition.

According to the theory of 50, 20, 30, a person's salary should be divided into 3 buckets that are:

• 50% of salary must go towards mandatory expenses (housing rent payments, utilities, medical care, basic food, and transportation).
• 20% of the salary must be used for savings and debt payments (programmed savings for old age or a special event, or the payment of debts such as card payments, bank loans, among others).
• 30% of the salary must be allocated for non-priority expenses (it is the expenditure of money on experiences, objects, or others that are not essential for the individual).

This income distribution is unrealistic because most people spend more than 50% of their salary on compulsory expenses, reducing their economic capacity for other purposes.

In this way, the 20% destined to savings and payment of debts would be a minimum amount of the salary, which could have serious consequences such as:

• Inability to pay debts
• Inability to save for the future

Learn more in: brainly.com/question/12198015