It’s a flexible budgeting option, so you can adjust the percentages as needed. The point of this budget plan is that you’re spending based on what you have, not on any other arbitrary measure like other budgeting plans. In this case, the best option is to decrease discretionary expenses, from 30% to maybe 15%. For example, if someone in the US has student loans or medical debt, their budget for living expenses and minimum bills and debt payment may be insufficient. This rule, of course, is not set in stone. Out of the 20%, ideally, at least 10% should go to savings, and debt payments for credit card and loans. 20% should go to savings and debt payments.30% should go to your discretionary expenses, which are not that essential to your survival, such as gym memberships, entertainment, unnecessary travel, designer clothing, etc.50% of your income should go to essential needs (mandatory/minimum bills payment, groceries, transportation, medicine, etc.).What is the 50-30-20 budget plan?Ĭoined by United States Senator and Harvard bankruptcy expert Elizabeth Warren, the 50-30-20 rule forces you to divide your spending on percentages. The 50-30-20 budget rule is not only applicable to Filipinos’ everyday lives, but also a good budget plan to practice for better savings. This is because the salaries and cost of living in this country vary from that of the United States. Some Filipinos may think that this form of budgeting isn’t feasible for the everyday person. After taxes, your income should be divided into: 50% on essential needs 30% on wants and 20% on paying off your debt or setting aside funds in case of an emergency. For those who don’t know, the 50-30-20 budget plan is an American concept that seeks to save money and budget your money smartly.
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