Saving money can be hard. Basic needs already take up a lot of our money so allotting a percentage of our income for savings can be hard especially if you have a tendency to buy whatever you want.
That’s why saving money takes a lot of effort and practice. It just doesn’t happen overnight because you have to continuously track your spending and cut back on some of your expenses. You also need to have a plan if you don’t know where and how to start.
This is where the 50/30/20 budgeting rule can come in handy.
The 50/30/20 rule is one of the most basic budgeting templates out there. If you’ve never budgeted before but want to start on the basic level, then this rule is for you. It’s not too specific that you’ll be bogged down by minute details of how much you should spend on a specific thing because it groups together the main things you should spend on. With the 50/30/20 rule, you only need to worry about your needs, wants, and savings.
50% for Needs
Since needs are the most important, this category will take up 50% of your income. Needs are living expenses so included in this are groceries, housing, transportation, and bills. Basically, it’s everything you can’t live without.
30% for Wants
Spending for wants depends on each person, but this category is for expenses you want to spend on but don’t necessarily need to live. These are for things you want to own and activities you want to experience. This 30% can be spent on your online shopping haul, vacations, subscriptions, entertainment, and other things you consider luxuries.
20% for Savings
Last but not least, 20% should be (or ideally) be set aside for your future. You can do a lot with your savings but first, try to build an emergency fund with it (3-6 months worth of your monthly salary). After that, you can invest for the future so you won’t have to rely on your paycheck forever.
While the 50/30/20 budgeting rule is a great starting point, don’t worry if you can’t follow it completely. Don’t starve yourself because you’re trying to stick to the 50% rule for needs because some people really have to spend more on this category because of certain situations in life.
The important thing is you have a starting guide to start budgeting and saving money, and I hope the 50/30/20 rule can be that for you.