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  • Writer's pictureElizabeth Schwartz

The Easiest Way to Not Budget, Budget: The 50/30/20 Method


In the pursuit of financial stability and well-being, I always like to work smarter and not harder. This is especially true when I think about the word "budgeting." Often times a very constricting and restricting word. In my eyes, it's kind of a dirty word because I like to live my life filled with abundance of hell yeah I can do this and if not, how can I do this instead of damn I can't :(, which is what the word budgeting usually means to me. I'm sure many people feel the same. Among the various budgeting methods available, the 50/30/20 rule is wildly popular, mostly for its simplicity and practicality. This rule provides a straightforward framework for managing finances, allocating income into three distinct categories: needs, wants, and savings.


Let's dive into the 50/30/20 budgeting practice and explore why it has become so common and one of my faves!


Understanding the 50/30/20 Rule:

The 50/30/20 rule is a #budgeting strategy that breaks down your after-tax income into three main categories:


  1. 50% for Needs: The largest portion of your budget, 50%, is allocated to covering essential needs. This includes housing, utilities, groceries, transportation, and other fundamental expenses required for day-to-day living. By prioritizing these necessities, individuals ensure that they can maintain a stable and secure lifestyle.

  2. 30% for Wants: The next 30% is earmarked for discretionary spending or wants. This category encompasses non-essential, but enjoyable, aspects of life such as dining out, entertainment, travel, and other personal indulgences. Allocating a specific percentage to wants allows for a degree of flexibility and enjoyment without jeopardizing financial stability.

  3. 20% for Savings: The remaining 20% is dedicated to savings and debt repayment. This includes contributions to an emergency fund, retirement savings, debt payments, and any other financial goals. By prioritizing #savings, individuals build a #financial safety net and work towards long-term financial security.

Why the 50/30/20 Rule is common is because it's easy AF. In today's banking apps you can set automations in place to make sure you follow the rule, making it even simpler.


Other common budgeting practices like the #EnvelopeBudgeting method, a cash-based system where individuals allocate specific amounts of cash to envelopes designated for different spending categories. For example, one envelope will be titled rent, one for groceries, one for dining out, etc. Once an envelope is empty, spending in that category stops until the next budgeting period.


Or the #zerobasedbudgeting method, which to me is like choking yourself, requires assigning every dollar of income a specific purpose. The goal is for income minus expenses to equal zero, ensuring that every dollar is allocated to a category, including savings and debt repayment. This method requires major excel spreadsheets, major time, and psychologically speaking (in my perspective) is a backwards looking approach instead of forward thinking (like the 50/30/20 rule). Sometimes these backwards thinking approaches bring on the feeling of shame or guilt, like the "I could've, should've, would've" thoughts.


The #50/30/20rule provides a balanced and flexible approach, while Envelope Budgeting emphasizes visual control, and Zero-Based Budgeting ensures meticulous allocation of every dollar, hence why the 50/30/20 rule is one of my favorites! It's simple, hands off, and sets you up for success! I like to keep my life as simple as possible, no unnecessary brainwork for me :) so 50/30/20 it is hehe

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