The 50-20-30 rule
It is a budget rule to help people reach their financial goals. It states that:
- You should spend up to 50% of your after-tax income on needs and obligations that you must-have or must-do.
- The remaining half should be split up between 20% savings and debt repayment and 30% to everything else that you might want.
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The 50/30/20 Rule
It breaks down your budget categories into three broad segments:
- 50%: Essential Expenses like housing, automobile expenses, groceries, insurance, utilities, etc.
- 30%: Discretionary Expenses (Non-essential) like Dining out, entertainment, drinks, etc.
The 50:30:20 budgeting method
Under this method, 50 percent goes to expenses, 30 percent goes to wants, and 20 percent goes to a combination of debt and savings.
A person with a healthy amount of disposable income but loads of debt could probably benefit more from the 50:30:20 method.
The 50/20/30 budgeting method
With the 50/20/30 budgeting method:
- 50% of your monthly spending goes toward essentials - your home, your food, etc.
- 20% of your monthly spending goes toward savings goals. It also includes paying down debts as it helps you build savings la...
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