Budgeting the Easy Way: The 50/30/20 Rule


Budgeting isn’t easy. Not many claim it is! But, there are some easy ways to think about budgeting to make it more achievable in your own life. If you’re like most people, it can feel like your whole paycheck is gone before you even get a chance to see the money. Between your bills, your necessities and a few fun things for yourself, that money just vanishes.

One way to visualize your money to make it go farther is to implement the 50/30/20 rule. While that might sound complicated, it’s actually quite simple. Let’s take a look at this minimalist tip for spending and saving.

Fifty: Half of Your Income Should be For Necessities

Try to get your bills in such a way that only half of your income is taken up by necessities. This means your rent or mortgage, your food and gas and all of your utilities shouldn’t exceed half your paycheck. We understand that, for many people, this is a laughably hard goal to achieve. However, it’s still a good goal to keep in mind.

If you can’t get half of your income to cover necessities, this should be a red flag that something isn’t adding up. Either you’re not getting paid enough for what you do, or you’re living above your means. You might consider moving to a less expensive area, or otherwise searching for a higher paying position.

Thirty: The Fun Stuff

Thirty percent of your income should be set aside for all of that fun stuff we all like to buy. Do you collect video games or comic books? Fancy dinners out on the town? Maybe you like makeup, or high fashion. Whatever it is, feel free to go crazy on it! Just make sure your spending on the fun things is only thirty percent of your income.

If your spending on fun things exceeds this, you’re probably not saving enough money. On the flip side, if you’re spending well under thirty percent of your income on fun stuff, that’s okay! Just remember that you could spend more safely, as long as you follow this final tip.

Twenty: Saving Up

Critically, make sure you save twenty percent of your income. Whether you’re saving it in a savings account or some other type of rainy-day fund isn’t the important part. What’s important is just that you save a fifth of your paycheck back. This allows you to have a nice cushion in case of emergency! It also helps you save towards your goals, such as a vacation, a new car, or even retirement.