{"id":6401,"date":"2020-08-31T07:00:42","date_gmt":"2020-08-30T23:00:42","guid":{"rendered":"https:\/\/www.infinitysolutions.com\/?p=6401"},"modified":"2022-05-05T11:53:10","modified_gmt":"2022-05-05T03:53:10","slug":"do-you-have-trouble-budgeting-try-the-50-30-20-rule","status":"publish","type":"post","link":"https:\/\/www.infinitysolutions.com\/blog\/do-you-have-trouble-budgeting-try-the-50-30-20-rule\/","title":{"rendered":"Do you have trouble budgeting? Try the 50-30-20 budget rule!"},"content":{"rendered":"

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From speaking to my clients, I know that budgeting personal finance is something that many people find extremely difficult. But, like life, managing your finances is all about balance. After you’ve met all your bills, you have to decide how to use your after-tax income. For example, suppose you’re finding deciding how much of your hard-earned money you should dedicate to the pursuit of pleasure, how much you should put away to secure your financial future and how much to set aside as an emergency fund. In that case, the 50\/30\/20 Rule serves as the ultimate lifetime money plan.<\/p>\n

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The 50\/30\/20 Rule<\/h3><\/div><\/div>[vc_column_text css=”.vc_custom_1651722390310{margin-bottom: 40px !important;}”]<\/p>\n

The 50\/30\/20 Rule of budgeting approach to managing income is usually credited to Senator Elizabeth Warren, a woman who presumably knows a bit about financial systems and the financial planning industry, having specialised in bankruptcy law. It’s genius in its simplicity. The 50\/30\/20 rule is a budgeting rule that divides your primary monthly expenses into only three major categories. You calculate your after-tax income, and you budget it into the following categories: needs, wants, and savings.<\/p>\n

\"Do<\/p>\n

Let’s take a closer look at the three categories described in the 50\/30\/20 Rule.<\/strong><\/p>\n

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Needs \u2013 spend 50% of your monthly income on these:<\/h3><\/div><\/div>[vc_column_text css=”.vc_custom_1651722414036{margin-bottom: 40px !important;}”]<\/p>\n

Under the 50\/30\/20 budgeting strategy, the majority of your income should go to paying for your needs. No, we’re not talking a night on the cocktails at Bar Rouge, your morning Starbucks or even your Netflix subscription! Needs are the living expenses that are\u00a0essential<\/strong>\u00a0for your survival \u2013 accommodation costs (rent or mortgage), basic groceries, transport to work, general and health insurance and utility bills. If you have debts, the minimum debt repayments also count as a need.<\/p>\n

This budgeting rule assumes you can cover all of these expenses with 50% of your post-tax income. If your monthly income is not enough, you need to look at areas of your life where you can cut back to save money. Ideas include:<\/p>\n