50/30/20 Rule

Budgeting

A simple budgeting guideline where you spend 50% of income on needs (housing, food, bills), 30% on wants (fun stuff), and save 20%. Just a starting point. Adjust based on your situation and goals.

Related Terms

Fixed Expenses

Costs that stay the same each month like rent, mortgage, car payment, insurance, and phone bill. These are predictable and usually cannot be avoided.

Variable Expenses

Costs that change month to month like groceries, gas, entertainment, and dining out. You have more control over these expenses.

Cash Flow

Money coming in (income) minus money going out (expenses). Positive cash flow means you're earning more than you spend. Negative cash flow means you're spending more than you earn - not sustainable long-term.