The 50-30-20 rule will save you a lot of money from now on


The 50-30-20 rule is a simple and clever way to allocate the monthly budget so that an amount is set aside at the end of the month.

In line with this topic: Clever savings tactic – Thanks to the 50-30-20 rule: This is how you build up a fortune without really giving up

This is how the 50-30-20 rule works

You can use a piece of paper, an Excel spreadsheet, an app or your online banking to apply the 50-30-20 rule in your everyday life. As the online bank N26 writes in a statement, savers should first know all their income.

The next step is to divide the income.

50 percent for fixed costs: What must be under fixed costs

Under fixed costs, list rent, electricity, telephone, cell phone, transport, insurance, membership fees or grocery shopping.

With income of 3,000 euros, that is 1,500 euros.

But… If the sum is more than 50 percent of the available monthly income, you should reduce the fixed costs.

  • Clarify whether a tariff change is worthwhile or whether you can cancel certain memberships.
  • When it comes to electricity, gas and heating oil, there is little room for maneuver to save money. The following applies here: You have to create the red pen elsewhere.
  • If the rent is too high: Check whether you can sublet a room, the garage or the basement. In extreme cases, you have to look for a new apartment that is cheaper.

Spend 30 percent on leisure and entertainment

Under Desires and free time, list expenses related to entertainment, hobbies, culture, and socialization purposes. Here are birthday presents for friends, a visit to a restaurant with the family, a visit to the zoo with the children or if you want to save up for a vacation every month. You should not have more than 30 percent of your net income available for this category.

With income of 3,000 euros, that is 900 euros.

In order to stay within the limit, you should know how much money is available to you. You can use dedicated apps to keep track of your free time spending or keep a simple list. The important thing is that you know and document your expenses.

If this sum exceeds the 30 percent limit:

  • reduce expenses. It doesn’t always have to be a restaurant visit, cook more at home.

Invest 20 percent in savings and investment products

The remaining 20 percent that should remain will flow into savings and investment products. With 3,000 euros net, you can put 600 euros aside.

How do I invest 20,000, 100,000 or 150,000 euros?

The FOCUS Online Guide shows you how to invest your money profitably and avoid expensive traps.

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