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September 26, 2022

Win at saving with the 50/30/20 rule budget

The 50/30/20 budget rule is budgeting made simple. Here's how it works.

What's the key learning?

  • Allocate 50% of your after-tax income on your need-to-haves.
  • Allocate 30% of your after-tax income on your want-to-haves.
  • Allocate 20% of your after-tax income straight into your savings account, or to pay off any debts you have.

Flux fam, if you’re struggling to meet your savings goals each month, don’t sweat it.

It can be tricky to know exactly how much of your pay-cheque you’re supposed to save, and how much you should leave yourself to spend on your nights out - or on some #selfcare.

Thankfully, there’s a really simple hack to nailing your savings: the 50/30/20 rule budget.

What’s the 50/30/20 rule?

We’re so glad you asked.

The 50/30/20 rule is this: 

  • 50% of your after-tax income on your need-to-haves
  • 30% of your after-tax income on your want-to-haves
  • 20% of your after-tax income goes straight into your savings, or to pay off any debts you have

Your need-to-haves are things like your rent, groceries, bills, insurances or health care. These are your non-negotiables in life, and they’re often the most expensive. That’s why up to half of your cash funnels straight into that pot.

Your want-to-haves? Say hello to facials, fancy dinners, new kicks and fresh cuts. These are all the things that are not absolutely essential, but they tend to keep us happy. Anything in this pot is completely optional. 

Your savings is the money you put away for the future - aka a house deposit, a holiday or a car. However, before you start beefing up your savings, you’ll want to pay off any debts you have. So, contribute that 20% straight to your debts first. Once you’re debt-free, you can start chipping away at your savings goal.

How to implement the 50/30/20 rule

The easiest way to implement this budget rule is to figure out your after-tax income. You can do that by checking out your bank account on pay-day and finding the transaction from your employer.

If you get paid $1,500 a fortnight, $300 of that is going straight to your savings (20%). You can spend $450 (30%) on wants within the fortnight, and the remaining $750 (50%) goes towards your needs.

It's a good idea to have separate accounts for each category. It might be even more effective to rename your savings account in line with your savings goal. For example, if your goal is to save for a house, call your account 'House Deposit'. This way, you can be motivated to stick to your 50/30/20 budget every time you check your bank balance (which should be daily!).

Ready to win at money?

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