The 50/30/20 budget is beautiful in its simplicity. It can help you divide your income into categories that make saving easy.
The 50/30/20 rule is a popular budgeting method that splits your monthly income among three main categories. Here’s how it breaks down: 50% for basic necessities, 30% for disposable income, and 20% for savings and debt payments. It’s a really effective way to balance your income, manage yourself effectively to generate a good amount of savings, avoid wasting money, and reach all of your financial goals.
Needs are expenses that you can’t avoid—payments for all the essentials that would be difficult to live without. For instance:
Wants are defined as non-essential expenses—things that you choose to spend your money on, although you could live without them if you had to. For instance:
Savings are put aside towards your financial goals or used to pay back any outstanding debt. For instance: