The 50/30/20 budget rule is a simple framework to manage finances effectively by dividing your income into three main categories:
- 50% for Needs: Essential expenses like mortgage, rent, utilities, groceries, gas, and insurance.
- 30% for Wants: Non-essential spending on shopping, restaurants, entertainment, travel, gifts, and gym memberships.
- 20% for Savings: Allocate towards building an emergency fund, retirement savings, or paying off debt.