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October 28, 2021

Win at saving with the 50/30/20 rule

The 50/30/20 rule is budgeting for dummies. 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, and 
  • Allocate 20% of your after-tax income goes straight into your savings, or to pay off any debts you have.

Flux fam, if you’re struggling to meet your savings goals, 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.

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

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, and 
  • 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 the majority 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 rule

The easiest way to implement the 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.


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