Do You Know the 50/30/20 Rule?

Are you looking for a new budgeting strategy for the end of the year? Let’s take a look at the 50/30/20 rule.

50% of income should go to living expenses or needs

Half of your income is dedicated to required living expenses. This includes groceries, rent, transportation, utilities, etc. By setting a goal percentage for this category it forces us to evaluate how we spend our money on things that are viewed as necessities. Is cheaper rent or a lower car payment needed to keep these expenses under 50%?

30% of income should go to flexible spending or wants

If you have your required living expenses capped at 50%, it will allow you 30% for flexible spending. This is anything that you want, but don’t need. Hobbies, travel, and anything else. When setting a budget that you want to stick to over a long period of time it is important to make room for these items. The goal is to implement a sustainable budgeting method.

20% of income should go to savings

Now we have 20% left that can be saved! The earlier and more that we save for retirement the better, being able to put aside 20% of your income for savings is a great way to start.

Do you have a budgeting strategy that you have found works for you? Let us know what you think!

Through unique employee benefits, compliance services, and HR solutions, we ally with contractors to empower them to build their businesses, while helping their employees to build a secure and prosperous future for their families.

Reach out to us for questions about your plans.
Participants/Employees: Call 888.608.2680

Plan Sponsors/Employers: Email clientsuccess@beneco.com,
or call 877.532.3797

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