The financial 50/30/20 rule

Thanks to our partners at Finwell – Healthier Relationship with Money who work to promote education, guidance and advice around financial wellbeing.  

If you have not heard of it before the way to manage your money is to use the 50/30/20 rule. This is to: 

1️⃣  Split your household income after tax and allocate into three separate areas: NEEDS, WANTS & FUTURE. 

2️⃣  50% into your NEEDS including all essentials that you have to pay for such as mortgage/rent/bills/food allowance etc. 

3️⃣  30% into your WANTS including non-essentials such as socialising, memberships and treating yourself or others 

4️⃣  20% into your FUTURE that can be allocated for things like clearing debt, building your emergency funds, short term goals or longer-term plans such as your Future Income Plan (FIP). 

5️⃣ As you earn more throughout your career you simply have more for each pot and gets you into great money habits for your financial wellbeing. 

Top Tips:

👉🏼 Set up direct debits for all NEEDS pot (50%) including rent/mortgage/bills to come out on the same day as soon as you’ve been paid. 

👉🏾 Set up direct debits for your FUTURE pot (20%) for your emergency fund, savings and investments. 

👉🏿 You’re left with your WANTS pot (30%) that can also then be split into the number of weeks in the month. 

👉 The exact percentages don’t have to be fixed but it can show if you’re living/spending beyond your means 

If you have been feeling the strain of the cost of living conversations. First and foremost be reassured that there are organisations out there offering support so research what is available to you and don’t be afraid to contact them for help and advice.