The 50/30/20 budget Find out how this budgeting approach applies to your money. |
What is 50/30/20 Budget?
The 50/30/20 budget is a personal budgeting method where you allocate your after-tax income into three categories:
- 50% of your income goes to necessities: This includes things like housing, food, transportation, and insurance.
- 30% of your income goes to discretionary spending: This includes things like entertainment, eating out, hobbies, and personal grooming.
- 20% of your income goes to savings and debt repayment: This includes things like emergency funds, retirement accounts, and paying off debt.
The 50/30/20 budget is a guideline and can be adjusted based on individual needs and circumstances. The goal is to prioritize your spending, reduce debt, and save for the future. By following this method, you can balance your spending between your needs and wants, and make sure you are on track to achieve your financial goals.