Budgeting is not fun; it’s much better when you can afford everything you want without having to plan for it. Unfortunately, that’s often not how real life works. If you find budgeting intimidating, you’ll love the simplicity of this rule.
The principle is simple. 50% of your salary is for all the necessities you need to pay for on a monthly basis. It means that half of your salary should go for rent, bills, food, and transportation.
20% is what you save. It doesn’t matter if you’re saving for a big future investment or for rainy days – nobody can argue about the benefits of having some money saved up.
Finally, use the remaining 30% for personal expenses. Eating out, traveling, buying clothes, or anything else you want but don’t necessarily need falls under this category.
The best thing about the 50:20:30 rule is that it can be applied to any salary. No matter how much you earn, you can use it to improve your finances.
