Believe it or not, budgeting can be simple! The 50/30/20 rule is the perfect simple yet effective approach to master your finances, ensuring you manage your needs, wants and savings. No matter if you are just starting your financial journey and need some guidance, or you are looking to streamline your current budget, this rule offers a simple approach to ensure all your finance goals are prioritised.
What is the 50/30/20 Rule?
The 50/30/20 rule separates your income after-tax into three broad categories, allowing for budgeting made easy and more organised:
- 50% Needs – All essential expenses that are a necessity for your basic living and well-being.
- 30% Wants – Non-essential spending that adds value to your life. T
- 20% Savings and Debt Repayment – Money that is put toward savings for your future and paying off any current debts.
Why does the 50/30/20 rule work?
This method is popular because it’s simple, flexible, and practical. There’s no need to track every individual expense—just allocate your income to these three main categories. It reduces financial stress by allowing you to enjoy life’s pleasures while still building a financial safety net. Plus, it’s adaptable; if you want to focus more on saving or paying off debt, you can adjust the percentages to suit your priorities.
