The 50/30/20 rule is a simple yet powerful way to manage your money. It helps you balance needs, wants, and savings in a structured way.
What is the 50/30/20 Rule?
It divides your after-tax income into:
1. 50% Needs: Rent, groceries, transport, bills, and minimum debt payments.
2. 30% Wants: Eating out, shopping, subscriptions, and entertainment.
3. 20% Savings & Investments: Emergency fund, investments, and extra debt payments.
Example Budget
If you earn ₦500,000 per month:
- ₦250,000 (50%) goes to rent, food, and transport.
- ₦150,000 (30%) is for leisure and wants.
- ₦100,000 (20%) is for saving and investing.
- It’s simple and easy to follow.
- It ensures you balance spending and saving.
- It prevents financial stress by ensuring you always save.
