MSN Money details what they call the "50/20/30 rule" for budgeting as follows:
According to the 50/20/30 rule, your monthly budget should be divided into three distinct categories of expenses: 50 percent should be reserved for essentials (think housing and food), 30 percent should be allocated for lifestyle choices (things like nights out and 121 channels of cable) … and at least 20 percent should go toward what we call “financial priorities,” which include debt payments, retirement contributions and, of course, savings.
This is the first time I've heard of this "rule" and wondered what you all think of it?
Personally, here's the progress I suggest for people:
- Start with a 10/10/80 budget - 10% giving, 10% saving, and 80% spending. If you're in a tough financial spot, you could begin 5-5-90, but I wouldn't go lower myself.
- As you grow your career, begin to increase the lower numbers so you start to give and save more.
- Use extra income (like from a side business) to give/save even more.
- Do this for long enough, and you'll become wealthy. :)
Thoughts from others?