Why I Wouldn’t Recommend the 50/30/20 Rule

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[BowlerActuary]

The thing is that the 50-30-20 rule is supposed to be used for those who have paid off bad debt. Or for some of us - myself included - I use the 50-30-20 rule when I am out of debt. So, this is a budgeting strategy that rewards those without debt.

This strategy can bucket anything into any of the 3 categories. Generosity can be budgeted as a want. This is also a 0-based budget.

[johnminer]

There's one thing wrong with the Thumbnail picture. No one is history only spent $74 at Costco!

[rebeccaotis]

I actually like using percentages to manage my money, it is the way that I have been doing things for 20+ years. I find it very flexible and if the percentages are not working out anymore then I change it. I don't follow a one-size-fits-all formula, I just look at what my needs are and figure out percentages that I feel comfortable with and that meet my needs. The only actual dollar amount that I budget is my car payment which gets transfered to a seperate checking account. I like the method because I don't have to worry about anything. If a big medical bill comes up I am not having to run to my emergency fund, if a giving oportunity comes up I can give what I feel led to give without my entire budget being thrown out of wack, I can treat family members to meals out.

[andresprieto]

After reading some of the comments, I guess it just depends on the individual's preference and lifestyle. As an accountant, I personally prefer zero-based budgeting because of it's detail-oriented nature. I like to see the detailed dollar amount for every line item, and I can justify recurring or new expenses each period. For me, 50-30-20 rule is just a blanket assumption that may or may not fit your specific needs. Kind of like pointing in a general direction vs. following a detailed road map.

[kingsgold]

50-30-20 isnt when you are paying off debt, it's when your debt is already paid off. 20% towards saving and 30% towards wants. When paying off debt, you should be throwing anything you can at the debt (that isnt going towards your Roth). You dont have the budget towards your wants, your consumer debt is a priority. (I know this information is counter to Ramsey Steps).

and giving is a want. that is built into the 30%. With 30% of your income going into stuff you want, you can give as much as you want from it.

Feel like this whole video as a lot of misinformation regarding the 50-30-20 rule.

[TheBarefootInvestorFamily]

We use the barefoot investor budgeting method 😊 we're Australian, living in Australia and for us it's working well right now. Tbh our immediate expenses exceed 60% by quite a bit, so we just "barefoot" everything after our rent and other bills come out. It's working well for our phase of life right now 😊

Goal setting for us is a different conversation and doesn't necessarily revolve around money.

No budget is ever "stagnant" evaluate what's going on and adjust the percentages depending on what's coming up...

[melissahood]

Before the Ramsey method on payday I paid bills and usually had nothing left. Now I look forward to payday because I like watching my net worth grow.

[phobedavis]

I think if you are just starting to make a budget the 50-20-30 is a game changer. You can make it the 50-30-10-10 if you believe in tithing. I am learning how to do a zero based budget and it is very difficult.

[markhines]

Rachel you seem to have forgotten what you learn from the book psychology of money your money rules cannot fit everyone. And we can't judge how other people spend their money because their rationale seems reasonable to them.

[savannahgarza]

To me, 50-30-20 was a good starting baseline for budget. Its like an alarm point. I by no means am trying to spend 30% on my wants every month or 50% on my needs. And you can adjust your "alarm points" as needed!

[faylinameir]

If you’re in debt you shouldn’t be spending that much money in your wants.

[andrewsherman]

Percentages are great in theory but not exactly practical because a percentage is not a dollar amount for example if I have 10 dollars to spend but I can only spend 2 percent on that whatever that's 2 dollars what if the whatever costs 3.50 if you're stuck on the percentage then that purchase isn't going to happen whether or not it's necessary

[byrnenoel]

The baby steps can definitely be done first. The 50-20-30 Rule with money is supposed to give a bare-bones skeletal structure to handling finances. It's not designed to be the "be-all-end-all" rule to finances.

It's a start; we assume (and maybe we shouldn't) that we will have a budget in place so that we can assign our money to specific needs, savings goals, and adjust our wants" to what is doable for each of us.

Both the baby steps and the 50-20-30 Rule can be fully used together after getting out of debt (if there is any debt). I need to also recognize the difference between a "want" and a "need"

I would rename the "20% savings" category to "Savings and Investing" so that the money is not just sitting there collecting in a bank; the money is working for me.

[AgneseLagzda]

Personally I think 50/30/20 works better and is more flexible than the Baby Steps.
- It's not stagnant, 20% goes either to debt or savings. If your debt payments need to be bigger, 50/30/20 highlights the need to increase the total income or dedicate some of the WANTS money to debt repayment.
- 50/30/20 is the goal. It's a healthy balance.
- Generosity IS A WANT, so even that is included in 50/30/20
- It doesn't focus on wants. 30 is 100-20-50 and that's how I view it too.

[gdaygday]

that's why we love management explained that we can all understand and work YOU! ❤😊

[katyalafon]

I would love to use your app but it is not available in Canada. 😢 any other recommandation ?

[arlettezambrano]

I just started using the Every Dollar app, but its hard because how do you do a monthly budget without knowing how much the income is gonna be? My husband's check varies every week depending on the amount of hours he works, so he doesn’t make the same amount on a weekly basis so how do I budget monthly???

[naomirachel]

started off with 50-30-20 and got nowhere lol. details matter

[moneyandminimalism]

Only $74 spent at Costco??! I would call that a success 😂

[henrywiebe]

What app would you recommend for the poor Canadians? Every dollar is not available in our country.