In a previous article about budgeting your money, we talked about different ways on how you can successfully budget your money so that you can last until the next payday. One technique we taught you is the 50/30/20 rule which is a rule that talks about different divisions of money. In this article, we will delve deeper into the topic on what the 50/30/20 rule is about and how it can be most effective in budgeting your income.
To begin with, what is this rule all about? Well if you are still confused on why it is called 50/30/20, these values determine the percentage of where your income should go. If you add the three values, you will have a sum of 100 which is the totality of your take-home pay. Of course, it is not mandatory for you to exactly follow what the rule says; you can tweak it a little bit but of course you should not change the idea or the essence of the technique.
50 – 50% of your income should go to the essentials
According to the rule, you should not go above 50% of your total take-home pay in paying for your essentials in life. 50% may seem like a big value but it will make a bit more sense if you know the things that fall under this category.
For clarification, the things that fall under this category are the things you cannot live without regardless of what you do for a living and where you live. These are the absolute necessities that you need to live. Under this category, the things you need to consider are:
Food
Housing
Transportation
Utility bills
Because of the big percentage, it can help you adjust or it can teach you ways on how you can abide to the rule for the future incorporation of the rule to your life. You can extend it up until 60% if you are having trouble adjusting with the rule but be sure to adjust the other 50% or to abide to the rule the next payday.
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