What is the 50/30/20 budgeting rule?

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What is the 50/30/20 budgeting rule?

Rounding it up

  • The 50/30/20 budgeting rule by US Senator Elizabeth Warren divides your after-tax income into three categories: 50% for needs, 30% for wants, and 20% for savings.

  • Your “needs” include obligatory expenses like rent or mortgage payments. Your “wants” are your basic pleasures of life. You should allocate the last 20% towards setting up an emergency fund, or paying down any high-interest debt.

  • To begin with the 50/30/20 budget, calculate your after-tax income on average. Then take a look at your spending habits to categorize your expenditures. Next, identify easy, low-hanging opportunities to save.

  • Remember that the 50/30/20 number is a guideline, and you can (and should) tweak them according to your own financial goals.

5 min read

Eddy Sutton
#budgeting#503020#rule#saving

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