The 50/30/20 Rule: The Simplest Way to Budget

For many people, budgeting means complicated spreadsheets and endless sums. The 50/30/20 rule is an easy starting point that gives you a clear picture of where your money goes.

50%: needs

Rent or mortgage, groceries, bills, transport and insurance belong here; the things life can't run without.

If this part is more than half your income, look at the biggest costs first; trimming a few small ones is rarely enough.

Read more: Emergency Fund: Your First Step to Money Peace of Mind

30%: wants

Eating out, entertainment, subscriptions and non-essential shopping make up this share.

Cancel subscriptions you hardly use; that's often where the biggest hidden savings are.

20%: savings and debt

Your emergency fund, long-term savings and extra debt payments go here.

Set this 20% aside at the start of the month, not at the end when nothing is left.

The takeaway

The 50/30/20 rule splits your income into needs, wants and savings. It's a simple method for anyone writing a budget for the first time.

This is a sample article, written to show what the blog can do.