Budgeting can actually be quite hard if you do know what you are doing. You have to keep so many things in mind that it also seems unrealistic to manage them all within your income stream. Not only that, the way everything is becoming more and more expensive, budgeting is necessary if you want to spend your life in a better way. Well, for that, you might have heard of the 50/20/30 budgeting rule that many people follow. But the question here is, does it actually help you financially? Or is it just a trend followed by thousands of people that do not really work? Let’s dive into the details, check some money savings tips, and find out how good the 50/20/30 rule actually is!
What actually is the 50/20/30 rule, and how does it work?
The 50/20/30 rule is a budgeting plan that was introduced in a book, but it caught the attention of many people from all over the world. The 50/20/30 rule actually divides your income into three separate portions, and that is what you have to follow in order to budget your finances for all types of scenarios.
The first portion!
The first portion of the 50/20/30 rule is 50% of all your personal finances of the month. This is the portion that you can keep aside for all the essential needs of your life. Those essential needs include food, utilities, bills, childcare, and other things that are necessary for anyone to live a healthy life. Of course, you have to stick to this budget and do not go overboard as the whole strategy can fall due to one single thing.
The second portion!
The second portion of the plan consists of 20% of your whole salary, and with this amount, you have to pay your debts. You can also save this money along with paying the debts to have a good amount for uncertain scenarios. This money can help you save yourself in emergencies, or these funds can even help you when you retire.
The third portion!
Life can be boring if you do not fulfill your wants and just let them go. Well, for that, the third portion of this rule would help you out. The 30% of your salary can be kept aside for all the wants and fun you would want in your life. This includes gadgets, dining out, travel, and other similar things.
Is it worth going for the 50/20/30 rule?
Yes, it definitely is worth going for the 50/20/30 rule, and it can actually help you financially. If you take a look at it, you will find that this rule keeps you safe in all scenarios. You get the funds for the necessities, emergencies, debts, and wants. So why not follow a simple rule that would make your financing and its tracking even easier and better?
In the end, it solely depends on you what you follow and what you don’t. But the 50/20/30 rule is actually healthy and proven to be successful for many people from all over the world.