You might want to sit down for this one.
There’s a new budgeting rule doin’ the rounds and it could change the way you look at your bank balance.
According to Mint Life, the 50/20/30 rule is the perfect budgeting plan for people in their 20s.
Basically the rule is that you should spend 50 per cent of your income on the essentials, you should save 20 per cent of your income, and you should spend the remaining 30 per cent on the fun stuff.
Lemme break it down for you:
The essentials – 50 per cent of your income
The clever people at Mint Life say you should set aside 50 per cent of your income for the essentials – the stuff you need to get through your every day life.
Essentials include things like rent, food, electricity bills and transport.
How much of the 50 per cent is divvied up between the essentials will depend on your lifestyle – you might pay high rent but save money on transport and electricity and vice versa.
Savings – 20 percent of your income
Once you’ve got the essentials sorted, you should direct 20 per cent of your income towards savings.
This amount includes savings accounts, paying off existing debts, and rainy day funds.
This category is all about paying off debt quicker and setting yourself up for your future.
Personal – 30 per cent of your income
This is the fun bit.
The remaining 30 per cent of your income should go on the things that enhance your lifestyle.