The 50-30-20 Rule: A Simple Way to Budget Your Money

Introduction

Budgeting doesn't have to be complicated. Senator Elizabeth Warren popularized this simple rule.

50% - Needs

Half of your income should go to absolute necessities.

Related: Why You Need an Emergency Fund and How to Build One

• Rent/Housing.
• Groceries.
• Utilities (Electricity, Gas, Internet).
• Transport.
• Minimum debt payments.

30% - Wants

This is for your lifestyle and fun.

• Dining out.
• Shopping.
• Entertainment (Netflix, Movies).
• Travel.

20% - Savings & Investments

This is for your future.

• Emergency Fund.
• Retirement savings (DPS, Mutual Funds).
• Debt repayment (extra payments).

Example

If you earn ?50,000:

• Needs: ?25,000
• Wants: ?15,000
• Savings: ?10,000

Conclusion

Adjust the percentages if needed, but always pay yourself (save) first.