Needs (50%)Īll humans have needs - we need food, water, shelter, and sleep to thrive and survive. Let’s take a look at the three categories of the 50/30/20 rule and see how the big picture breaks down: 1. The simplicity of this rule of thumb makes it the ultimate contender for those who want to have a budget without constant oversight. By dividing your budgeting categories into just three buckets, the 50/30/20 rule lets you tailor your budget to your lifestyle and living expenses, giving you plenty of room to tweak it as needed. The beauty of the 50/30/20 rule as a budgeting method is that it’s not a rigid system. Ready to see if the 50/30/20 rule is right for you? Let’s dig into it. Savings & Debt - put the last 20% of your income toward a savings account, investing, and/or paying down debt.Wants - 30% of your income should be spent on the things you want.Needs - 50% (or less) of your income should go toward needs, like food and housing.
So what exactly do the numbers mean? The three parts of the 50/30/20 rule Embraced by finance pros and new budgeters alike, it’s an easy way to divide your monthly expenses by category.
If you’ve ever looked into budgeting strategies, you’ve probably heard of the 50/30/20 rule. Whether you’re working with a spreadsheet, pen and paper, or an automated finance app, having a tried-and-true budgeting method can help you navigate your personal finances.
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