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.
50/30/20 rule: what it means
The 50/30/20 rule is a way to split income: 50% on needs, 30% on wants and 20% on savings and debt repayment.
The 50/30/20 rule is a simple way to split your after-tax income into three parts: half for needs (housing, utilities, groceries, transport, minimum loan payments), 30% for wants (cafes, entertainment, shopping, travel) and 20% for savings, investments and extra debt repayment.
The shares are a guide. If needs take more than half your income, the rule shows that the reserve lies in big decisions such as housing, transport or loans, with cafes giving only part of it. If needs take less, the difference is best sent to savings.
Applying the rule takes real spending figures for 2 or 3 months, so it works together with expense tracking: once spending is sorted into categories, the shares take a minute to calculate.
In detail, with examples: How to make a personal budget: the 50/30/20 rule and alternatives
Related terms
Emergency fund Net worth Compound interest
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