The 50-30-20 Rule

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Name:  Mission Federal Credit Union

Entry Category: Saving Money and Frugal Living

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Heidi: Welcome to a special edition of Money Smarts. Here with me today is Vince to talk about an amazing invention.

Vince: Thanks, Heidi. Has this ever happened to you? This cake is your paycheck, and you go about spending willy-nilly on everything, and mmm, I’m livin’ the sweet life, but at the end of the month–bam–you’ve got no money left until your next paycheck.

Heidi: Sure, Vince, we’ve all been there. But what can we do about it?

Vince: Heidi, those days are over thanks to the new, easy-to-use 50-30-20 rule.

Vince: Let’s do this. Cut that in half. That 50 percent is going to be for your needs. That’s rent, that’s car payments and that’s food. Now the 30 percent, that’s going to be for your wants. Entertainment, fun stuff, giving back to charities. And that 20 percent is going to be for saving up for maybe a large purchase or a nice vacation, and it works for ages 1 to 101.

Heidi: So you can have your cake and eat it too? That’s it for today’s Money Smarts. Get out there and use the 50-30-20 rule, and make budgeting delicious.

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These articles are written by the in-house GOBankingRates team.