How to Use the 50/30/20 Rule to Save More While Spending Less

Making your budget doesn't have to be complicated or take up all day.

In fact, the best ways to budget are often the simplest. Take the 50/30/20 rule for example.

The 50/30/20 rule is a simple monthly budgeting method that tells you exactly how much you should spend on savings and living expenses each month.

By having a clear overview of your monthly budget, you can avoid overspending and build your savings over time without having to carefully record every transaction.


What is the 50/30/20 rule?

The 50/30/20 rule is a set of simple guidelines for planning your budget.

This allows you to distribute your after-tax income as follows:

50% for your needs

Their needs include shelter, food, clothing and sleep. In more direct terms it is rent or mortgage, utilities such as gas, electricity

Need is what you can't live without, or at least not so easily. They include things like:

The rent, the salesman, utilities such as electricity, water and sewage.

30% for your wishes

Your desires are your internet and cell phone bills, dining out with your friends, your gym membership, your coffee and wine addiction, your streaming services, your endless list of subscriptions.

When you find yourself spending more than 30% on things you want, it's time to look at how you can reduce your spending.

Switch to a cheaper mobile provider, buy cheaper clothes and prepare your meals for the week so that you only buy food when you need to.

Wishes are what you want, but not really necessary for survival. Could be

Hoby, vacation, restaurants, music course.

20% for financial goals

The remaining 20% ​​should be used to pay off debt, savings, and investments.

Yes, you can do all three at once.

It's about your common sense and your way of thinking when it comes to money.

This category includes two main areas:

All savings, such as retirement contributions, saving for a house and putting money aside for other financial goals you have!

debt payment

Where to start whit 50/30/20 rule?

Then look at your spending habits over the past two months and begin to determine which segment those spending fall into.

Remember this is a guideline and not an absolute one. Before each release, ask yourself the following question: "Was it a need or a wish?" and find out which subcategories fit your budget. It is also recommended that you round your utility bills to the nearest $5 to anticipate peak months.

When you're done, how do your expenses compare to each category? Are there expenses that you might want to categorize or do you need to adjust the percentages to suit your situation?

Once that's done, how do your expenses compare to each category? Are there any expenses that you could potentially recategorize, or do you need to adjust the percentages to suit your situation?

Then identify easy-to-realize savings opportunities. For example, do you have too many streaming services? Can you split the bills with your roommates and split them 50/50?

If you think you're ready, test your new budget for a few weeks to see if it's workable. If a budget isn't workable, you don't stick to it. That's why it's essential that you find a balance that works for you in the short term.

The 50/30/20 Rule vs. Other Popular Budgets

The 50/30/20 rule isn't the only one that works. Here are some other budgeting techniques that may work for you:

The 70/20/10 rule: This rule is similar to the 50/30/20 rule, but divides your budget as follows: 70% for living expenses, 20% for paying off debt, and 10% for ' savings'.

The 80/20 rule: With this method you immediately set aside 20% of your income for savings. The remaining 80% can be used as you see fit, without any follow-up.


It is hard to save and life often brings us unexpected costs. By following the 50-20-30 rule, people have a plan for managing their after-tax income.

If they discover that their need-related spending is more than 20%, they can find ways to reduce that spending, which will help direct money into more important areas like emergency funds and pensions.

Unfortunately, the 50/30/20 rule is not for everyone due to special circumstances, such as living in a high housing cost neighbourhood.

However, remember that you can tailor this rule to your specific needs by adjusting the percentages to suit your personal situation and financial goals. If that doesn't work, there are plenty of other budgets you can try.

Life is all about enjoying it and living like a Spartan is not recommended but if you have a plan and stick to it you can cover your expenses, save for retirement while doing the activities that make you happy

Thank you for taking the time to read our article!

If you want to know other articles similar to How to Use the 50/30/20 Rule to Save More While Spending Less You can visit the category Saving.

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