We know. We are in the middle of summer, a holiday season par excellence, and talking about saving is complicated. However, we believe that saving is important. And even if you are not going to start right now, knowing what the 50/20/30 method is, will encourage you to do so.
The 50/20/30 savings method consists in distributing your income as follows: 50% to cover your basic expenses, 20% for savings and 30% for your personal expenses. As simple as this. Thus, knowing the monthly budget available for both expenses and savings, it is easier to meet. By respecting it month by month and seeing how your savings grow, you will feel more motivated and unintentionally, you will be acquiring a good saving habit.
This saving technique is increasingly common and a strategy to start building an emergency fund. That is, that mattress to throw in the face of possible unforeseen events without having to borrow money from your relatives or resort to external financing.
Implement the 50/20/30 method
On other occasions, we have talked to you about different savings methods, such as the 4% rule , the 52-week challenge or the Kekeba , among others. The 50/20/30 is another one of them. Neither better nor worse. One more with which to save once and for all.
The key to success is to put it into practice as copper. That is, distribute your income as follows:
50% for your basic expenses
By basic expenses we understand, the mortgage or the rent, the light, the water, internet, telephones, community expenses, shopping cart, transport, loans … That is, those expenses that you have to face every month, Yes or yes.
20% to save
To be able to respect this percentage it is important that you separate the corresponding amount from your usual expenses to avoid falling into temptation. Enter it in an account other than your usual checking account.
Imagine that you have implemented the 50/20/30 method and have been doing it for a few months. If you see that the percentage for basic expenses you have money left over, do not spend it. Destine it to this other game and experience in first person the satisfaction of seeing how, little by little, your efforts bear fruit.
30% for personal expenses
It is important that you know that these expenses are, in many cases, totally expendable. However, they are the ones that make us enjoy life. Go shopping, go out to dinner, have a drink, travel, treat yourself, buy gifts … Not every month, necessarily, you will have to spend 30 percent of your income on this game. Whatever about you, add it to savings.
Let’s look at it with an example. Suppose you have a monthly income of € 1,500. The distribution, based on this saving method, would be:
- Basic expenses (50%) = € 750
- Savings (20%) = € 300
- Personal expenses (30%) = € 450
What do you think, do you see yourself able to do it? If your answer is yes and you are a client of the Cara Rural Group, we encourage you to download the urbanvia report application . An app that will allow you to manage and control your income and expenses easily, quickly and safely.
In a very intuitive way, you will have, at a first glance, the distribution of your income with respect to your expenses with graphics and in a detailed way how your income and expenses have evolved in recent months.
Saving is not easy, we are aware, but it is never too late to do so. We assure you that there is no greater satisfaction than to see how your savings grow.