The 50 30 20 rule

By Cryptorufus7777 | Cryptorufus7777 | 10 Mar 2021

There are several different ways to organize your budget, and the 50-30-20 rule is a creative and efficient model for achieving that goal.

Organizing your budget is more than just having a plan to keep your accounts up to date. Your budget should also list what your financial priorities are and demonstrate how much you spend on each category of expenditure.

The 50 30 20 rule basically consists of dividing your expenses into three categories:

-Needs: 50% of your income must be dedicated to survival expenses, essential items for your life. This includes, rent, utilities, food and transportation.

-Personal desires: 30% of your income should be used for flexible spending, things you buy but don't necessarily need it (like money spent on movies and travel).

-Savings and / or debts: 20% of your income must be dedicated to financial goals, that is, your savings, investments or debt payments.

This method of budgeting is useful because it offers a set of rules that, if followed, can better guide your path towards financial independence.

Keep in mind that the percentages set for essential items and wish-related expenses are the maximum spending amounts you should have in these categories.

However, if you want to save even more than 20%, you can allocate more money from these areas for other financial purposes.

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