50-30-20 rule

[Josemendez]

Have you heard about the 50-30-20 rule ? It is a rule proposed and popularized by Senator Elizabeth Warren in his famous book called , All Your Worth.

The rule focussed on setting out the right percentage of ones income to needs , wants and savings.

The rule says that 50% should be used for our needs , 30% should be used for our wants and then the remaining 20% should be used for Savings.

The rule to be is quite good because it has given high priority to needs . most people do not know the difference between wants and needs. Many people are still using this rule up till now .

 

[Donkiz]

Yes, the 50-30-20 concept is good and helps in prioritizing your expenses so that you don't end up spending recklessly.

But this is only achievable if your income is more than your expenses, In a situation where your monthly take home is less than your needs there will be no room for the 30% for wants or the 20% meant for savings, infact you might even have to carry some of the needs over to the next month.

It is only when you have different sources of income or if the only income source that you have pays very well, that's when the 50-30-20 concept will be obtainable.