The 50/30/20 Rule

 

The 50/30/20 Rule is a super simple budgeting method to manage your money effectively. It breaks down your monthly income into three main categories:

---

📊 Breakdown of the 50/30/20 Rule:

• 50% Needs 🏠
  Essentials you must pay for to live.
  Examples:

  • Rent / Mortgage

  • Utility bills (electricity, gas, water)

  • Groceries (basic food items)

  • Transportation (fuel, bus fare, car loan)

  • Minimum debt payments

• 30% Wants 🎉
  Non-essentials that improve lifestyle.
  Examples:

  • Dining out

  • Shopping (clothes, gadgets)

  • Entertainment (Netflix, concerts, trips)

  • Hobbies & leisure

• 20% Savings & Debt Repayment 💰
  Future security and financial growth.
  Examples:

  • Emergency fund

  • Investments (stocks, mutual funds, crypto)

  • Retirement savings

  • Extra debt payments (to clear loans faster)

---

🧮 Example:

If your monthly income = 100,000 PKR

• 50% Needs = 50,000 PKR

• 30% Wants = 30,000 PKR

• 20% Savings = 20,000 PKR

---

✅ Why It’s Useful:

• Easy to follow for beginners.

• Keeps lifestyle spending in check.

• Ensures savings every month.

⚠️ Where It Might Not Work:

• If your income is very low, needs may take up more than 50%.

• If you live in a high-cost city, housing may exceed the needs portion.