Money Saving Hack: the 50-30-20 Budgeting Rule

In collaboration with MoneyPlus | With the cost of living rising and inflation, there’s no surprise that many people are looking to budgeting their monthly or even weekly expenses to help them save and be more careful with their money. There are plenty of hacks and tips out there but one that’s very effective is the 50-30-20 budgeting rule.

What is the 50-30-20 budgeting rule?

The simple 50-30-20 budgeting hack encourages you to split your monthly earnings into 3 percentage categories:

• 50% for essentials needs
• 30% for wants
• 20% towards savings (or paying off debts but for the sake of this post, we’ll stick to savings)

This method for saving and budgeting is so effective because:

1. It’s simple, you’re doing the same thing every month
2. It makes it easier to keep track of where you’re money is going
3. It allows for things like treats and wants

So how are we breaking down the 50-30-20?

50% essentials needs

The things that will fall under this category are expenses like rent/mortgage payments, any insurance policies you have taken out, food shopping, electric bills, water bills, transport (commuting or fuel) and mobile phone payments. These are all the things we need to pay each month in order to keep a roof over our head and food on our table.

30% wants and treats

This category allows you to spend 30% of your monthly income on wants. Or as I like to call it, treats. This can include things like Netflix or Disney Plus, gym memberships, eating out or getting takeaways, gifts for birthdays / Valentine’s Day / Christmas etc. Anything that isn’t 100000% necessary but is a nice extra.

20% savings

And finally, the final 20% of this split will go into your savings account. Like I mentioned above, this could also be used to pay off debts as well. But by putting that 20% into your savings every month, that helps build your savings account steadily with a set figure every month.

The great thing about this technique is that it can be applied to any income take-home amount.

You don’t need to earn a certain amount in order to use this technique to help boost your savings but those 50-30-20 figures will be different, depending on each person’s individual income.

You can start applying this technique by:

• Taking note of your salary each month (this includes employment and any extra)
• Go through your monthly bank statements and split your spendings into the 3 categories above
• Work out the percentage amount of each category
• Assess if any changes can be made to your monthly spending

This hack is a great start for if you want to start making positive changes towards your spending habits and your saving goals. If you’re not seeing any growth in your savings and are feeling disheartened, it’s time to make some changes. And the 50-30-20 technique is a great place to start!

What savings techniques do you use?