VIDEO: Understanding the 50/30/20 Rule

Hi everyone, my name is Park, and welcome to my blog!

This is Practical Prosperity—the blog where we talk all things money, finance, and building a better future.

In this article, we’re diving into a popular budgeting method that many financial enthusiasts swear by: the 50/30/20 Rule.

"Planning for the future: Reaching the retirement exit with a saving plan in place."

What Is the 50/30/20 Rule?

The 50/30/20 Rule is a simple, practical guideline to help manage your personal finances. The main goal is to help you save money and gain control over your income without overcomplicating things.

Here’s how it works:

• 50% of your income goes to your needs.This includes essentials like rent or mortgage, groceries, utilities, insurance, and transportation.

• 30% of your income goes to your wants.This covers non-essentials like dining out, entertainment, hobbies, subscriptions, and shopping.

• 20% of your income goes toward financial goals, such as paying off debt (like credit card balances, student loans, or car loans) or building savings and investments.

Who Is This Rule For?

The 50/30/20 Rule is a great starting point for the average person looking to manage their money better. It’s not a hard-and-fast rule, especially if you're earning significantly more than the average income—it’s more of a guideline.

That said, even high earners can benefit from this framework, adjusting the percentages as needed for their lifestyle and goals.

Why It Works

The beauty of this method lies in its simplicity. You don’t need to track every penny. Instead, you categorize your expenses into three broad buckets and adjust accordingly.

When followed consistently, the 50/30/20 Rule can help you:

• Avoid overspending

• Stay out of debt

• Build long-term wealth

Final Thoughts

At the end of the day, financial health is all about discipline and consistency. The 50/30/20 Rule is a powerful tool to help you get started on the path to prosperity.

Remember, it’s not about being perfect—it’s about being intentional with your money.

Thanks for reading, and be sure to check out more episodes of Practical Prosperity for tips on building a better financial future!