SeaComm Federal Credit Union OFFICIAL BLOG

Looking for a foolproof budget? Try the 50/20/30 rule.

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If you’re new to budgeting or just trying to figure out how to manage your money more effectively, try the 50-20-30 method. Here’s how to start:


  • 50% of your income should go to living expenses and essentials. This includes mortgage, rent, utilities, and other necessities like groceries and transportation.
  • 20% of your income should go to financial goals. This includes savings, investments, and debt reduction (loans, credit cards.)
  • 30% of your income should be used for flexible spending. These are purchases that you want, but don’t necessarily need.

Keep in mind that the percentages for living expenses and flexible spending are the maximum you should spend. Falling under those percentage recommendations should leave more money for other financial goals.

How to begin


You’ll first need to figure out your income – review your pay stubs and determine exactly how much you bring home each month. The total sum is what you’ll base the 50-20-30 split on. While it’s important to divide your income in accordance with this method, there is some flexibility allowed. Forbes lifestyle states “You can bend it a bit by altering the percentages to make it work better for you.”

Setting up automatic transfers and repeating payments through your credit union is the perfect way to stay true to the 50-20-30 plan. You can easily manage and track your spending from the convenience of your desktop or mobile device with NetTeller.

Why it works


This method has proven to work because it keeps your finances simple enough so you can pay your bills, contribute to your savings, while still maintaining the freedom to use some of your earnings just for fun. The discipline of this method ensures that you’ll stay the course over time, and eventually reach your desired financial stability. The key is to stay active in managing your money every month, making sure you’re covering your expenses (50%), being responsible and saving for the future (20%), and allowing yourself some room to enjoy the fun things in life today (30%).

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