Savings Strategies
Savings Strategies
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Creating a budget can help you make confident decisions and enjoy peace of mind. A detailed budget, though, can be complex to manage.
The 50-30-20 rule splits expenses into just three categories. It also offers recommendations on how much money to use for each. With some basic information, you can get on the road to financial well-being. The 50-30-20 rule can be easily shift to allow for various incomes and abilities to spend and save (i.e. 60-30-10, 70-10-20, etc.).
(Khan Academy, 2023; UNFCU, n.d.)
The 50-30-20 rule, and subsequent variations of the rule can be broken down as:
50% allocated to needs - think your living expenses for the month
30% allocated to your wants - think fun things and outings that aren't completely necessary
20% allocated to your savings - think about debt repayment but also potential savings and investments
Using the rule! Follow the steps below to follow the 50-30-20 (or variation of) savings plan.
Know your monthly income - POST tax
Calculate your needs budget
multiply income by 0.5 (0.6 or 0.7)
Calculate your wants budget
multiply income by 0.3 (or 0.2, etc.)
Calculate savings
multiply income by 0.2 (or 0.1)
Now...write down your actual spending after tax
Compare expenses to budget
A monthly budget can assist in using this rule. This form is free to download.
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