It’s not even the middle of the month and you’re already counting the days until your salary is transferred? Managing money can be quite tricky, especially on a limited income. The 50-30-20 rule is even simpler.
Basically, we are much bigger fans of spending money than we are of saving. After all, a number on your bank statement doesn’t bring nearly as much joy as a new dress or a nice evening with your loved ones. But to scratch at zero (i.e. the overdraft limit) month after month and to be afraid that washing machine If something breaks unexpectedly because we couldn’t pay for the repairs, that’s also hard on our minds. That’s why we need a strategy for how we handle money – and one possible one is the 50-30-20 rule.
This is behind the 50-30-20 rule
According to experts, the 50-30-20 rule is generally a good one Method for dividing one’s own income or budget. What the rule says: 50 percent of our money should cover the costs of things we need. 30 percent is available to us for things we want. And we should then put the remaining 20 percent aside, ideally into a separate savings account.
To give us a feel for the two relevant categories, here are a few examples:
- Things we need: Rent, mobility (petrol or monthly public transport pass, for example), food (supermarket/market shopping, canteen), electricity, water, telephone, broadcasting fee
- Things we want: Clothes, traveling, going to a restaurant, cinema, yoga class, theater etc.
Depending on your budget and fixed costs, we can Adapt values to our individual situationbut the tendency should remain recognizable (and a 0 as the third value is not valid!).
Admitted: Even if experts mean leeway with the percentages rather than fixed values, the dimensions are likely to be unrealistic for many people. Just think of big city singles with low to middle incomes: If they can afford 50 percent for the rent alone, many are already happy (although some landlords insist that rent applicants only get an apartment if if the rent does not exceed a third of our proven net income, but by no means all).
But basically it’s good if we… Be clear about what we NEED to spend money on and what we WANT to afford – after all, this is the prerequisite for keeping – or getting – control over our budget. So: maybe just try it out?! After all, it doesn’t cost anything…