How the 50-30-20 Rule Can Help You on Your Journey to Financial Success

Having a plan for your money is crucial to building a solid financial foundation. If you’re just getting started on your financial journey, the 50-30-20 rule can help you spend and save your money wisely. By distributing your dollars into three main categories or buckets: needs, wants and savings, the idea is to limit fixed expenses (or needs) to 50% of your after-tax income and discretionary expenses (or wants) to 30%, leaving 20% for savings. The 50-30-20 rule isn’t a requirement but can be a great starting point to help you take control of your finances, plan your spending and progress towards your financial goals. 50: What are your needs? In this bucket, half of your funds go toward paying expenses you can’t avoid. We all need food, housing and healthcare, and other needs could include transportation, clothing and utilities. Regular debt payments, like monthly credit card minimums and loan payments, would also be considered a need because you have a deadline to pay them each month. What makes something a “need” versus a “want” depends on your lifestyle. Transportation is typically considered a need, but the type of transportation you select might vary depending on where you live. Having...