Managing Money with the 50-20-30 Rule

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With Christmas coming up, there’s no better time than now to start using your money in the most sensible ways. With Christmas presents to buy and lots of exciting events coming up, you may struggle to do them all with the finances you have.

Recently, I’ve been using the 50-20-30 rule and it’s made such a huge impact on my money and what I’m able to do. Since using the technique I’ve managed to save enough to afford TWO holidays before Christmas, as well as purchase gifts for other people – all without majorly scrimping. It’s allowed me to budget my money and look at my list of priorities to ensure that I can afford what I plan to do.

If you’re looking for money or advice or are keen to know exactly what and how the 50-20-30 rule works, here’s all you need to know:


50%: Needs

The ’50’ part of this rule assigns 50% of your income to be used for your needs. These are things like food, transport, utilities, phone bills and other necessities that you need to pay for (or things that you can’t not purchase!).

This chunk is the largest as we often need to pay for things monthly.

Related: 8 Money-Saving Hacks for Students


20%: Savings

What would a finance article be without a mention of saving? After all, it is one of the only ways that you can afford to do the best experiences in life!

When you get your monthly pay check, immediately transfer 20% of your wage into a savings account and don’t touch it… Even better, forget that you have it and you’ll get a great surprise when you check back in!

The money that goes into your savings can be used for whatever you want. Perhaps you’re saving money for a house deposit, a new car or a holiday with your family. Whatever it is, assigning 20% of your wage to your savings account can help this happen without feeling too poor throughout the month.


30%: Wants

Now we get to the good bit – your wants. By only spending 30% of your monthly wage on things you want rather than need, you’ll be more conscious of what you’re buying as you only have a specific amount each month.

Your ‘wants’ class as anything that is not a necessity, such as fancy meals out, your entertainment subscriptions and even your hobbies.

If you reach the end of the month and you haven’t spent all of this money, put the extra directly into your savings rather than carry it over through to the next month. By keeping every month’s money clear and separated, you’ll have a great routine and know exactly where you’re up to with your own personal finances.

What is your best money-saving tips? Have you ever tried using the 50-20-30 rule?

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