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Budgets for Beginners: 50/30/20 Budget Rule

This budget plan is great for doing more than just paying rent and adding money to your savings, it allows you to have fun and enjoy the money you work hard for.

Budgets for Beginners 50 30 20 Budget RuleThe 50/30/20 Budget rule is a really good and easy way to budget your money every month. A lot of budget plans don’t always take in account some of the wants you may have a desire to purchase which is why this budget plan can be a great option for you.

The first step to this budget plan is to figure out your monthly income after taxes are taken out. After that you try to limit your needs to 50% of that monthly income. It is important to remember that needs and wants are very different. Needs are expenses you need to pay every month like housing, utilities, car payment, insurance, and groceries. Thirty percent of your monthly income will be for wants. Wants are items you want but are not required for survival. These would include things like dining out, name brand clothing, or hobbies. Keep in mind that you do not have to spend 30% of your monthly income on wants every month. If one month you don’t spend the amount allotted, you can add it to your savings. The last 20% of your monthly income will go right into your savings. Saving a chunk of your income is extremely important because you cannot predict the future. Set savings goals. The first goal should be to fund an emergency savings account for unexpected things come up. Set other savings goals for those items you want that take longer than one month to fund, for example to travel or try something new.

This budget plan is great for doing more than just paying rent and putting money into your savings, it allows you to have fun and enjoy the money you work hard for.

Monthly Income: $________________________

50% - Needs

30% - Wants

20% Savings

 

 

 

 

 

 

Julia Fabijanic, undergraduate student / Human Development and Family Science

Carrie Johnson, Ph.D., AFC, Extension Specialist and Associate Professor  /  Human Development and Family Science

 

Want to learn more about budgets?

Budget Like a Boss  Using Envelopes to Track Expenses Budgets for Beginners Getting Started Budget Boss Tracker

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