50/30/20 Rule – Expense Management (It Really Works!)

Have you heard about the 50/30/20 Rule Before? It is a simple plan which is Intuitive enough and helps people to accomplish their financial goals much more easily. According to the 50/30/20 rule, it is advisable to spend 50% of your earnings on basic needs that you require and the obligations that you ought to do. The other remaining 50% can be split up into two parts, one 20% and the other is 30%. The first half i.e. 20% can be used as savings for repaying debts and the Other 30% can be used by you on anything that you want.

This rule is designed in a way that can help a lot of people in managing their hard-earned money and at the same time keep with themselves enough savings to be used during emergencies or maybe after retirement.

Here Is in-depth information about the 50% Needs:


All of us have needs and requirements to deal with in our lives. They also include the bills that you have to pay in any case. They also include the rent and different other daily payments like healthcare, utilities, groceries that are important requirements at home, insurance, etc. These are some of the most essential requirements for every household and these are some of the must-haves for a normal middle-class family also.

This 50% category of needs does not include the extra items that you may require like ok a subscription for Netflix, chilling out at Starbucks, or maybe going for fine dining.

This 50% of your income should be able to accomplish the needs and requirements that are enough for you. In case you have to spend more than 50% of your income on accomplishing such needs, it is time for you to both reduce your expensive needs and downsize your lifestyle a little.

Also, you can go for a home that is a little smaller so that you can keep a track of the 50% that you are spending on your basic needs and requirements. Also downsizing your lifestyle could include carpooling and using public transport for traveling. Also, you can start cooking more often at home rather than relying on food from outside. This will save a lot of money.

Here Is in-depth information about the 30%: Wants


Human life is full of wants and desires, each day we desire something and we keep on asking for it. Spending money on wants is the money that is being spent on things that are not essential enough. These can be different sources of entertainment like dine out with friends in the family or a movie or a vacation. It could also include purchasing a new handbag for yourself or new clothes. These want also include the newly launched gadgets and products that you wish to use.

All these things are optional but it is suggested to only 30% of your income on wants. To save your money on these wants and desires, you can try using alternative solutions like watching a movie at home itself, or maybe working out at home rather than paying a monthly fee at the gym.

This category of 30% wants also includes the decisions that you make while choosing between a less expensive food item and a very costly one. Includes a decision of choosing between purchasing an expensive sports car or an economical car that will solve your purpose.

This category of wants includes everything that is a little extra requirement in your life, but you can choose from the less expensive alternatives because our wants always make life full of entertainment and enthusiasm.

Here Is a piece of in-depth information about 20%: Savings


The last twenty percent of your income should be used for either savings or investment purposes. These 20% savings include adding more money to your bank account or making contributions to a mutual fund account.

You can also invest in the stock market and you should make sure that you have enough emergency savings that they can be of help during low times in life. Savings should prove to be useful during retirement or job loss.

You can use these savings for repaying the debts and always make it a primary goal to use these 20 % savings as an additional income to your emergency fund.

Importance of Savings

It is always important to have some amount of money saved with yourself so that it can always be used for future requirements. We never know when an emergency is can come up; we never know when we might require money to spend upon ourselves or money to invest in a better program.

We never know what medical expenses we might have to make. Hence it is really important to ensure that even if once the emergency fund savings have been used, it is really important to replenish them as soon as possible.

Conclusion of 50/30/20 Rule

It is true that it is really difficult to have savings but at the same time its importance cannot be ignored. Is important to save as much as possible and the Expense Management 50/30/20 Rule is an amazing plan to help you to maintain your income expenditure.