The 50/30/20 Rule
By Xavier G.
Have you ever spent money super quickly before realizing you didn’t have enough money to buy your essentials? Well, this is a case for most people, and, if you fit in this category, this usually means you aren’t the best saver. Keeping a healthy bank statement, checkings and savings, can be pretty hard. There are strategies used by multiple people that help them save money, while also being able to spend money for the stuff they want while being able to comfortably meet their needs.
This is where I welcome you to the 50/30/20 rule. This rule is broken down into 3 categories. The 50 stands for needs, 30 is the wants, and 20 is savings. These are all a percentage out of 100% of your income you receive. Examples of the 50% needs go to rent, groceries, transportation, utilities, insurance, and phone bills. These are all essential needs that you can set off to the side. The 30% goes into your wants. This goes along with things that you enjoy, like going out to eat, digital streaming services, shopping, vacations, hobbies, and entertainment. This is a good amount of money to spend while not going overboard. Finally, the last 20% can go into your savings, debt payments, emergency fund, retirement plans, investments, and to help pay off loans. This is very important to make sure you have a very well organized plan to help you financially.
This budgeting lifestyle is very important for young people who are starting to use their money. This is a very good strategy to use for students who are still in college or even high school. The freedom some may experience when entering college and getting a job on the side can lead them to spending money carelessly. It’s super easy to overspend when going out to eat and driving around with low gas that you’ll have to pay for. It’s easy to not understand the importance of budgeting when not thinking about food and gas. Most people try to calculate by marking down stuff they’re going to buy without thinking about the food and transportation people need every day. The 50/30/20 rule method gives students a stable structure without making budgeting feel overstimulating or stressful.
It’s very simple and very easy to understand, especially for students having to worry about school, jobs, sports, and social lives.
One of the reasons why this method is so popular is the simplicity of it. It’s not hard to understand like some other methods that make you track down every purchase that you have made in the last month. These methods can not only make it seem stressful, but it can also take up a lot of time for people. The 50/30/20 rule does have you do any of this. It’s very simple and very easy to understand, especially for students having to worry about school, jobs, sports, and social lives. This allows people to have the ability to be more flexible with their schedules while still having a very easy simple budgeting method in the back of their heads.
Another key reason why this is another good method is because it teaches people self control with money. A lot of people spend money without checking how much money is in their accounts, with credit card and tap to pay on the phone becoming more common. It’s way easier to spend money because you don’t have to pull out your wallet, grab your card, then swipe out your code. Now you can grab your phone, tap your screen twice and pay like that. This bad habit can lead to credit card debt and financial stress. By separating them into the three categories, you’ll become way more aware of the amount of money you have and how much money you need to spend. This can also help people determine what really is a want and what really is a need. This can help improve a good relationship with your bank account and help with smart decision making.
The 50/30/20 can also help with people’s goals. Many young people have a dream asset they would like to purchase one day, and, with the help of this method, they can have a proper savings rather than just selecting how much money you have left by the end of the week before another paycheck hits. The savings can help with a car, moving into another place, traveling, paying for college, or paying off a loan. Each month you add 20 percent is a crucial habit to have in the long run, because you never know what obstacle life throws at you. You may need to use the savings you’ve made from the 50/30/20 rule. The earlier the better it is to save the easier it is to help manage future payments.
The 50/30/20 Budget Rule Explained With Examples
What Is The 50/30/20 Budget Rule? | Chase
The 50-30-20 Budget Rule Explained – Henrico HR
50/30/20 Budget Rule: What It Is and How to Use It – My First Farmers
Create to Learn 
Amazing, beautiul, creative, and everything we need in this world!! ❤
LikeLike