How to plan your budget according to the "50/30/20" rule and start saving without too much trouble?
What is the 50/30/20 rule?
It's an intuitive way to keep a personal or family budget. All your income is divided into three main sections: 50% is spent on needs, 30% on "wants," and another 20% goes into the piggy bank.
50% of the budget is for necessities
These are mandatory expenditures: mortgage or rental bills, utility bills, and so on, as well as things you need to survive. The latter usually includes loan payments, rent, rent, food, clothing, transportation, and medicine. Sometimes life, health, and important property insurance are added to the list.
30% of the budget is for "wants"
These are additions that make life more pleasant, fun and interesting. Without them, a person will definitely not die and ruin their health. You can live without a subscription to streaming services, restaurants, or a new bag.
Unlike needs, "wants" are easier to manage. Usually they have gradations. For example, you can buy a subscription to a great fitness studio, or you can choose a simpler gym or do exercise at home. Or instead of going to an expensive Italian restaurant, you can make risotto at home.
20% of the budget is for savings and investments
The rest is worth saving for the future. First and foremost, for a safety cushion or “rainy day fund.” This is a reserve of money on which you can live for 3-9 months without income or pay for sudden major expenditures like a new refrigerator or an expensive medical treatment.
And then you can start investing money to earn more. The methods can be different: a deposit in a bank, buying shares on the stock exchange, or cryptocurrency. There is no one-size-fits-all option for everyone, the main thing is to think through an investment strategy in advance.