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The Budget Rule 20-30-50

Why live paycheck to paycheck when you can thrive through the art of careful budgeting.

A budget that actually works has all of your expenses built into it so that you are not surprised when your rent and taxes are due—or when you have to pay your insurance premiums.

It also helps you deal with fluctuating bills like higher air conditioning bills in the summer and heating bills in the winter.

50/30/20 Budget Rule is a way of allocating your after-tax income into three broad categories



It can be hard to differentiate between essential and splurge items sometimes. Needs are subjective but the basic principle to differentiate remains the same.

Needs are the expenses that are essential and cannot be forgone. They are necessary for the SURVIVAL.

Once you allocate a budget, it becomes easier for you to prioritize the things that are of absolute importance to you.

Here is a list of needs to get you started:

  • Shelter (Example: Home Loans, Utility bills)
  • Protection (Example: Health Insurance, Prescription Drugs)
  • Food (Example: Groceries)
  • Basic Hygiene (Personal and Household)
  • Transportation (Example: Auto Loan, Gas )
  • Installments and Legal fees



Mere sustenance is not what you want to live for! After a hard day’s work, sometimes, you just want to sit back and enjoy the finer things in life.

You may want to dine in a fancy restaurant for getting a promotion or you may want to finally buy that latest and outrageously expensive phone you had an eye on!

And that’s fine. As long as you have your needs covered and have a certain amount of money set aside for your emergency fund, it is okay to splurge on yourself! Because, what is the point of working so hard if the outcome does not make you happy.

Wants are the things that may not be at the top of your sustenance list but it is something that you need for living a happy and content life. But remember to splurge in moderation.

Let me help you out on what can constitute as a want in various categories:

-Household (Example: Remodeling, Domestic help)

-Food (Example: Dining out)

-Personal (Example: Manicures, Gifts, Spas)

-Recreational (Example: Vacations, Club Memberships)

-Transportation (Example: Business Class Ticket over economy)



Inculcating the habit of saving every month is of utmost importance.

It does not have to be a huge chunk of your paycheck. A little goes a long way!

A healthy reserve of money post payment of all your bills and debt premiums is just the cushion you need to soften the blow of any unfortunate circumstance that may arise in the future.

This easy Budgeting Rule is enough to get you started towards a journey of managing your finances well! Check out our Facebook and Instagram pages to get easy tips and tricks on becoming phenomenal at managing your finances.

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