What is the 50-30-20 Rule of Budgeting for Saving, Investing & Spending?
The 50-30-20 rule can do the incredible- build a strategic budget that allows meeting financial goals with ease. The simple and intuitive rule can help manage money effectively and wisely.
The 50-30-20 rule designates a certain percentage of the in-hand income into three parts which helps in structuring the finance and creating a blueprint spending plan.
This type of budgeting divides the post-tax income and structures the budget in a way that meeting the financial goals becomes easy without making many compromises.
>> Click here to watch the video explaining the 50/30/20 Rule Of Budgeting!
Ways to save money!
- MintMobile: Switch your cell phone provider to MintMobile, plans starting at just $15/month!
- CIT Bank: BEST High-yield savings account; your bank shouldn’t be charging you money. Instead, YOU should be making money off your money!
- Ladder: Get a quick, free quote on term life insurance, affordable, online term life insurance. No exam! No waiting! No hassles!
- Upside: Earn 20 cents per gallon on gas cash back when you download the app.
- Rakuten: Get cash back on online purchases and automatic coupons and savings with their browser plugin… and remember, you have to make a $30 purchase to get your $30 for free!
- SmartCredit: Find out what is affecting your credit score, how to increase it, and safeguard your privacy may help you to save money.
Are you wanting a new weekly meal plan? Or maybe it’s your first time ever using a meal plan? Either way, you are in luck!
I’ve created a Free 7-Day Meal Plan for you and your family!
Using a weekly meal plan is the best way to cook healthy meals, save money, and time! My weekly meal plan includes a grocery shopping list, weekly meal plan, recipes and printables.
A great way to save money while meal planning is to choose recipes with the same ingredients for multiple meals. This will help make your shopping list shorter resulting in saving money. Some ingredients you can even cook once and use for the next day as well
What is the 50/30/20 budget rule?
50% for Needs
This category purely defines expenses that one cannot do without. These include the must-haves that are necessary for survival. These needs only include expenses that help in sustaining a basic standard of living.
This includes nothing that caters to luxury. For instance- grocery shopping, health insurance, rent, energy bills, water expenses, children’s education, house EMI, insurance and minimum debt repayment. Spending an amount that covers more than these basics falls more towards a lifestyle.
According to the 50-30-20 rule, any individual can spend about 50% of their income on the above mentioned possibilities. The ‘needs’ category includes nothing extra that one can live a minimal lifestyle without.
20% for Savings
Here’s a bucket list that deserves utmost importance. Wants and needs most certainly look after our present, but savings is what will keep us safe & secure in the future. This category will look after our future self and be a savior to any kind of emergency in life.
Therefore, it is the most crucial component of the 50-30-20 rule. This category of funds can be used for loan repayment, children’s education, buying a house, taking care of hospital bills or any crisis.
All the money saved in this category will be helpful in case of any unforeseen circumstances. Therefore, one must always aim at increasing the savings amount.
Some of the ways of pooling money in this space is by investing in gold, ETFS, small cap, long cap funds, mutual funds, stocks, tax saving funds, real-estate or any other savings that can be diluted in the future. Hiring an Investment company will definitely help you manage your assets.
Amidst any uncertainties, this will be a safety you can bank on.
Increase your savings by starting an online side hustle!
Are wanting to start an online small business and need the extra money, you don’t want to join an MLM, but you have no clue where to start or what you could even do?
If this sounds like you, then the Discover Your Own Online Side Hustle Workbook is your answer!
Here’s a sneak peek at what’s inside:
FREE DOWNLOAD! Discover Your Own Online Side Hustle Workbook
30% for Wants
As the name suggests, wants are not something that’s essential but what you aspire for. The category includes all upgraded decisions that help in elevating your lifestyle. This category includes everything that an individual can choose to or not to spend on.
So, most definitely this bucket list is optional. For instance- gym membership, restaurant bills, shopping, holidays, movie tickets, grooming splurges or anything else that brings pleasure.
The 50-30-20 rule suggests spending about 30% on wants but choosing wisely. Human wants are most definitely endless and therefore it is important to regulate and pick wisely. If the list of your wants exceed 30% of your income, you know you have to downsize it. It is a great way to watch over your expenses and have control over them.
Ways to save money!
- MintMobile: Switch your cell phone provider to MintMobile, plans starting at just $15/month!
- CIT Bank: BEST High-yield savings account; your bank shouldn’t be charging you money. Instead, YOU should be making money off your money!
- Ladder: Get a quick, free quote on term life insurance, affordable, online term life insurance. No exam! No waiting! No hassles!
- Upside: Earn 20 cents per gallon on gas cash back when you download the app.
- Rakuten: Get cash back on online purchases and automatic coupons and savings with their browser plugin… and remember, you have to make a $30 purchase to get your $30 for free!
How to apply the 50-30-20 rule of budgeting?
Now that you have understood the 50-30-20 rule, here’s telling you how you can swiftly apply it.
Calculate your income after tax deduction
Before you can create a budget, you need to know how much money you have coming in each month. Start by calculating your net income, which is your income after taxes and other deductions. This is the amount of money you actually have available to spend each month.
Track your monthly expenses
To create an effective budget, you need to know where your money is going. Keep track of all your expenses for a month, including fixed expenses like rent and utilities, as well as variable expenses like groceries and entertainment. Use this information to create a detailed list of your monthly expenses.
Identify your wants
Once you have a list of your monthly expenses, identify which expenses are necessary (e.g. rent, food, utilities) and which are discretionary (e.g. dining out, shopping, entertainment). This will help you prioritize your spending and make sure you’re not overspending on things you don’t really need.
Evaluate the amount that can be spaced out in every category
The 50/30/20 rule suggests allocating 50% of your income to needs, 30% to wants, and 20% to savings and debt repayment. Take a look at your expenses and determine how much you need to allocate to each category. If your expenses exceed your income, you may need to adjust your spending or find ways to increase your income.
Make adjustments if required
Creating a budget is an ongoing process. As your income and expenses change over time, you may need to adjust your budget accordingly. Be flexible and willing to make changes as needed to ensure you’re staying on track with your financial goals. Remember, the goal of budgeting is not to restrict your spending, but to help you make the most of your money and achieve your financial goals.
Do Stay At Home Moms Need Life Insurance?
If you’re a stay-at-home mom, chances are you’ve thought about protecting your family in every possible way. You’ve got snacks packed, doctor’s appointments scheduled, routines dialed in—and you show up, day after day, doing the invisible work that holds everything together.
But there’s one thing many moms don’t plan for…
What would happen to your family financially if something happened to you?
Most people assume life insurance is only for the income earner. But replacing all the unpaid work a stay-at-home mom does? That could cost tens of thousands a year.
The truth is, life insurance for stay-at-home moms isn’t just smart—it’s essential. And thankfully, it’s also affordable.
Don’t Believe Everything You Think by Joseph Nguyen Book Review
If your mind never slows down, Don’t Believe Everything You Think is the book you need. Whether you’re stuck replaying conversations, overanalyzing texts, or lying awake running worst-case scenarios, this book will speak directly to you. It’s written for overthinkers and deep feelers who care deeply, want to get it right, and are mentally exhausted from carrying the weight of their thoughts.
Last-Minute Tax Prep? How QuickBooks Can Save You Time and Stress
It’s that time of year again, tax season. If you’re feeling the pressure of last-minute tax prep, you’re not alone. Whether you’re a freelancer, small business owner, or side hustler, scrambling to gather receipts and organize expenses can be overwhelming.
The good news? QuickBooks can make tax filing easier, even under a tight deadline. With features designed for expense tracking, organization, and automated reports, you can streamline the process and avoid costly mistakes.
How to Host A Membership In ThriveCart
Imagine a world where your passion creates a steady flow of income and builds a community that truly connects. Membership programs offer recurring revenue and a sense of belonging that turns your audience into a loyal family.
You’ll discover how ThriveCart can simplify your membership management. ThriveCart makes checkout a breeze and handles recurring billing so you can focus on delivering amazing content. You’ll learn a step-by-step setup, smart integration tips, and how to tackle common hurdles.
3 Ways Quality Data Can Help Small Businesses Grow
For small businesses, growth isn’t just an ambition – it’s a necessity. Historically, scaling a business required either a huge amount of time and expensive testing trial-and-error approaches, or relying on guesswork. But with the help of technology, small business owners can now use high-quality data as a game-changing tool to access clear insights and actionable strategies. With the power of data behind you, it’s easier than ever to refine your business operations and achieve sustainable growth.
10 Ways to Reduce Your Mental Load and Free Up Your Mind
Feeling overwhelmed by the never-ending mental to-do list? The constant juggling of responsibilities, remembering schedules, managing household tasks, and keeping up with work can drain your energy. If your brain feels like an overstuffed filing cabinet, it’s time to clear some space.
Mental overload doesn’t just cause stress—it can impact your focus, productivity, and overall well-being. When your mind is constantly cluttered, decision-making becomes harder, creativity suffers, and burnout becomes a real risk. By intentionally reducing your mental load, you free up mental energy for things that truly matter, like enjoying time with loved ones, pursuing personal goals, and simply feeling more at ease in your day-to-day life.
Benefits of applying the 50-30-20 rule of budgeting?
The 50-30-20 rule of budgeting saves time & energy
By setting a budget using the 50/30/20 rule, you can quickly and easily categorize your income and expenses, making it easier to see where your money is going and how much you have left to spend. This can save you time and energy in the long run, as you won’t have to constantly track your spending or worry about overspending.
Categorize and be clear about what needs to be done
The 50/30/20 rule helps you categorize your expenses into needs, wants, and savings/debt repayment. This makes it clear what your financial priorities are and helps you stay focused on your goals. By categorizing your expenses, you can also identify areas where you may be overspending and make adjustments accordingly.
Organize the finances as per your requirements and availability of funds
The 50/30/20 rule is a customizable and flexible budgeting option. You can adjust the percentages to suit your individual financial situation and goals. For example, if you have a lot of debt, you may want to allocate more than 20% of your income to debt repayment. Similarly, if you have a high income, you may be able to allocate more than 30% of your income to wants.
The 50-30-20 rule of budgeting will give you a better understanding of what you can afford
By setting a budget using the 50/30/20 rule, you will have a better understanding of what you can afford and where you need to cut back. This can help you avoid overspending and living beyond your means, which can lead to financial stress and debt.
The 50-30-20 rule of budgeting strikes the right cord of balance between income, expenses, lifestyle and necessities
The 50/30/20 rule helps you strike a balance between your income, expenses, lifestyle, and necessities. By allocating 50% of your income to needs, 30% to wants, and 20% to savings/debt repayment, you can ensure that you’re covering your basic expenses, enjoying your life, and saving for the future. This balance can help you achieve financial stability and peace of mind.
Why the 50-30-20 rule is a great starting point for managing your finances
If you’re looking for a simple and effective way to manage your finances, the 50-30-20 rule is a great starting point.
By allocating 50% of your income to needs, 30% to wants, and 20% to savings, you can create a budget that covers your basic expenses, allows you to enjoy your life, and helps you save for the future.
Once you’ve mastered the 50-30-20 rule, you can begin to adjust the ratios to better suit your individual financial situation and goals.
For example, if you have a lot of debt, you may want to allocate more than 20% to savings and debt repayment. On the other hand, if you have a comfortable emergency fund and no debt, you may be able to allocate more than 30% to wants.
Regardless of your personal ratios, it’s important to always allocate at least 20% of your income to savings.
This can help you build an emergency fund, save for big-ticket items like a down payment on a house or a new car, or invest for your long-term financial future.
By adopting the 50-30-20 rule early on, you can establish good financial habits and manage your money more effectively. With a clear understanding of your income and expenses, you can make informed decisions about how to spend your money and achieve your financial goals.
So why wait? Start using the 50-30-20 rule today and take control of your finances!
Some of the links in this article are "affiliate links", a link with a special tracking code. This means if you click on an affiliate link and purchase the item, we will receive an affiliate commission. The price of the item is the same whether it is an affiliate link or not. Regardless, we only recommend products or services we believe will add value to our readers. By using the affiliate links, you are helping support our Website, and we genuinely appreciate your support.
what do you think?
You must be logged in to post a comment.