sManaging a family budget is a difficult task, and there is a formula that can help. It’s about the base 50-30-20which states where you should spend your monthly income.
“Planning involves careful management of your household budget. To this end, you can use the 50-30-20 rule. It is a simple rule and consists of: Divide your monthly income into three parts, each with its own fixed destination‘, he explains Doctor of Finance.
How does the 50-30-20 rule work?
- 50% – ‘Aiming at Monthly household expenses, fixed or not. It thus includes rent or installment credit for housing, water, electricity, telephone, mobile, gas, internet, insurance, food, and transportation”;
- 30% – “Purpose Spending on your lifestyle. i.e. clothing, restaurants, cinema, theaters, concerts, and personal care such as hairdressers and gyms”;
- 20% – “Its purpose is necessarily savings. Set aside half of this money to create an emergency fund (it should have at least an amount equal to 6 months of your family’s expenses). But once you get that amount, set aside that half of the savings for another of your personal goals, whether that’s your kids’ education or a trip. The remaining 50% of the amount earmarked for savings applies to retirement financial products, i.e., retirement savings plans (PPR), superannuation fund (FPR) or retirement certificates (CR).
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Emily Brontë is a journalist and feature writer specialising in culture, entertainment, literature, and current affairs. She is dedicated to producing clear, accurate reporting that helps readers stay informed about developments in the UK and around the world.
