![]() Now that you understand the concept behind the 50 30 20 budget, you’ll see why it’s so easy to implement. This is your chance to set aside the money you know you’ll need in the future. Depending on what stage you’re at, this could be for paying off debt, building an emergency fund, saving for a house and saving for retirement. This 20% is for your own personal financial goals. The great thing about this budgeting method is that your saving habit is taken care of (finally!). These could be holidays, eating out, certain hobbies, gym and other expenses that you could do without if your budget was tightened. 30%: wantsģ0% of your income should be allocated to expenses that you “want” rather than simply need. Think of what you spend every month that is essential for you to live on and put them into your “needs” bucket. These needs include rent, groceries, utilities and any other expenses you pay that you know you’ll need no matter what. Here are what these different percentages cover: 50%: needsįollowing this rule, 50% of your income should be allocated towards “needs”. Put simply, the 50 30 20 rule uses percentages from your income to tell you where your money should be going every month. It’s a budgeting system that is system agnostic: you can use a pen and paper, Excel spreadsheets and even the Money Dashboard app. The 50 30 20 budget was first invented by US senator Elizabeth Warren, which she designed to help families from all sorts of backgrounds take better control of their finances. Armed with the 50 30 20 rule, budgeting is suddenly a little easier to handle. Do I need to print out my bank statements? Take out the old pen and paper? Become an Excel whizz? When it comes to managing our finances, it’s not as obvious as it may seem.Īnd that’s where the 50 30 20 budget comes in: a handy rule of thumb to help aspiring budgeters determine how much to spend on what. That’s because most of us don’t know where to start when it comes to budgeting. Budgeting is a bit like flossing: we all know we should be doing it, many of us try to turn it into a habit, but most of us put it in the back of our minds and forget about it.
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