What Is The 50/30/20 Budget?

The 50/30/20 budget is the most popular budget.

Do you get frustrated trying to figure out how to organize a budget? There are many ways you can set up and manage a budget. One of the most popular methods is called the 50/30/20 budget.

What Is The 50/30/20 Budget?

The 50/30/20 budget is a popular budgeting rule. The 50/30/20 budget allocates fifty percent of your income towards your needs, thirty percent towards your wants, and then the final twenty percent you save.

How To Use The 50/30/20 Budget

50% For Needs

You allot fifty percent of your income goes towards your needs. A necessity is something you require to live. Everyday essentials include rent, electricity, water, maintenance costs, HOA fees, property taxes, fuel, and groceries. Some other expenses that may be classified as needs could be healthcare, depending on your age and health status.

Also, if you have any debt, be sure to pay that off as soon as possible.

30% For Wants

You designate thirty percent of your income toward things you want. Wants could include buying new clothes, subscribing to a streaming service, eating out, or purchasing something you like. You can live without fulfilling your desires, but wants can make life more enjoyable.

20% You Save

The final twenty percent you save. You want to begin to put money each month into your savings account. This will allow you to start to build up savings to cover any emergencies that may come up or to save so you can make a big purchase. Examples of big purchases include buying a house or a car. You can eventually invest some of your saved money into various investments.

Investing in assets is how you can begin to build wealth.

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