Budgeting and saving
How to make a personal budget: the 50/30/20 rule and alternatives
We walk through the rule on a UAH 30,000 income and three alternatives for people who find 50/30/20 a poor fit.
Budgeting and saving
How to plan spending, save without stress and build an emergency fund that can carry you through a lost income or an unexpected bill.
Articles
Budgeting and saving
Emergency fund: how much you need and where to keep it
How to work out your amount, where to start if there is nothing to save, and where to keep the money so it is there when you need it.
How to plan a personal budget
A budget is not a spreadsheet with a hundred categories. It answers three questions: how much comes in, how much goes on essentials and how much is left for your goals. Once you know those numbers, decisions about purchases, loans and savings get much easier.
The simplest scheme to start with is the 50/30/20 rule: half of income for needs, 30% for wants, 20% for savings and debt repayment. Here is what it looks like for a take-home income of UAH 30,000.
Where to start
- Download statements for 2-3 months and sort the spending into needs, wants and goals.
- Set up an automatic transfer of part of your income to a separate account on payday.
- Build an emergency fund of at least one month of essential expenses, then grow it to 3-6 months.
- Once a month, spend 15 minutes comparing plan and actual, and adjust the next month.
More on the methods in “How to make a personal budget”, and on a reserve for the unexpected in “Emergency fund”.
FAQ
How much should I save each month?
A good benchmark is 20% of take-home income under the 50/30/20 rule. If essential expenses take more than half your income, start with 5-10% and raise the share as income grows or expenses fall.
How can I track spending without effort?
The easiest way is to use the spending categories in your banking app and review the totals once a month. A separate card for daily spending and a separate account for savings make tracking almost automatic.
What if my income is irregular?
Plan your budget from the lowest monthly income of the last 6-12 months. Split everything above that amount as soon as it arrives: part into your emergency fund, part towards your goals.