50-30-20 Rule

50% toward necessities, 30% towards discretionary, 20% to savings

The 50/30/20 Rule of personal finance stipulates the proportion of your cash flow based on your after-tax pay:

• 50% to necessities
  • Housing, food, insurance (including medical premiums), basic utilities, transport, loan repayments, childcare
• 30% to discretionary items
  • Eating out, entertainment, travel, subscription services
• 20% to savings and After-Tax Investment
  • 401k, IRA, HSA, saw savings accounts contributions, aaaaaand payments above the minimum for mortgage, loans, etc

Example Figures §

Gross: $11,137Taxes:$2,000 Base: $9,137

Needs: $4,568-Medical:$518 - Mortgage: $2000-Car:$550 - Daycare: $1000-Utilities:$521 - Insurance: $145-Groceries:...-$566 to make budget Wants: $2,741-Subscriptions:-EatingOut:-Entertainment:-Travel:Save:$1,827 - HSA: $500-401k:$1,391 - IRA: $\mathrm{25...}$89 extra saved, not bad.

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Source §

• a few. Forbes and NerdWallet most prominently.

Related §

• 7 Bank Accounts
• Pre-Tax or After-Tax, which to use
• Budget
• Budget Bootcamp