The 50/30/20 budget is a way to allocate your after-tax income, it uses 3 principles to do this. 50% of income going to needs, 30% going to wants, and the remaining 20% going to savings and financial goals.
If you’re new to budgeting and want a simple way to organize your money the 50/30/20 budget can be a great way to start. Developed by Elizabeth Warren and Amelia Warren Tyagi, the 50/30/20 budget is a really easy way to organize your money. What I have found useful is It allows flexibility and an easy three-way system to divide your money, helping you form good budgeting habits whilst still having freedom with your money.
Needs are what they say on the tin they are what you absolutely cannot live without. On your needs budget you might find the following: - Rent - Utility Bills - Essential Travel Costs - Insurance
Wants are like needs but if you had to ask yourself to be without to survive your could. These include things like:- - Meals out - Gym - New Clothes
The financial goals section covers 2 main areas: – Any saving goals you have – Debt repayment (not the minimum amounts but additional payments to save you money in the long term on hefty interest)
You can get access to a free calculator to work out your 50/30/20 budget by using the link below
If you are just getting started with your finance journey, then the 50/30/20 budget could be a good way to ease into budgeting.