The 50/30/20 Rule for Budgeting

The 50/30/20 rule is a simple yet effective method that divides your into three main categories: Needs, Wants, and . This article you understand how to implement this rule in your .

Step 1: Calculate Your After-Tax Income

Your -tax income is what you have left after all deductions like taxes, Social Security, and contributions. This is the amount you'll be with.

Step 2: Allocate 50% to Needs

Allocate 50% of your after-tax income to needs like , , groceries, and .

Step 3: Allocate 30% to Wants

Allocate 30% of your after-tax income to wants like out, entertainment, and .

Step 4: Allocate 20% to Savings

Allocate the remaining 20% to savings and investments. This could be your fund, retirement savings, or other investments.

Step 5: Review and Adjust

Regularly review your to ensure you're sticking to the 50/30/20 rule. Make as needed to on .