Nowadays, it is increasingly difficult to balance living expenses and at the same time devote at least a small amount to saving for the future. Organizing a family budget is often a thankless task, and we can quickly begin to stress over every single cent. When you get used to calculating and redistributing personal income according to this rule, finances will no longer be a puzzle. The 50-30-20 rule is ideal for anyone who doesn't want to think about every cent. Namely, it allows you to cover your current needs and goals with your income, and at the same time still have enough left over to enjoy life.
Planning a household budget is desirable in many ways and the 50-30-20 rule proves that it is not difficult. If you want to simplify the process of calculating your household budget, this calculator may be a great choice for you. Includes just three easy steps, which will help you prioritize your monthly financial obligations while providing you with financial stability. The 50-30-20 rule is comprehensive, meaning it covers all expenses.
What is the 50-30-20 rule?
In its simplest form, the 50-30-20 rule divides our income into three categories:
- 50 % our obligations, i.e. fixed costs
- 30% of our desires and leisure activities
- 20% of savings or investments
Under do not forget to calculate the fixed costs rent or credit, overhead costs, mobile tariffs, transport costs, insurance costs and grocery shopping. With 1,000 euros of income, half should be spent on fixed costs. But if the total is more than 50 percent of your disposable monthly income, you should cut back on fixed expenses and figure out where you can save.
At wishes and free time, list the costs, which you use for membership fees in sports clubs or the theater, for birthdays, trips, cinema or museum tickets, etc. These should not exceed more than 30 percent of your monthly budget. If this part of the cost also exceeds the planned percentage, reduce the cost.
The last part of the income in the amount of 20 percent, put aside and put it in a savings account or invest. In order to be regular at this, it would be best to open a permanent account.
The first step is the most important - try to bring expenses within the "framework" prescribed by the 50-30-20 rule.Photo: Karolina Grabowska/Pexels
Why is the 50-30-20 rule so good?
This plan makes your finances simple and easy to track. The first reason for such an organization of finances is its simplicity, secondly helps to calculate and allocate literally every euro of the budget, the third reason, but by no means less important, is that such an approach to personal finances and the money you have at your disposal each month, can help you save more, as you managed to save earlier. Otherwise, the advantage of such an approach to the household budget is that it will be easier to resolve accumulated financial obligations and pay off any debts.
