The 50/30/20 rule is a budgeting method that suggests allocating 50% of your income to needs, 30% to wants, and 20% to savings and/or debt repayment. Let’s try and work this budget with a monthly income of £3,000 (after taxes) in the UK.
Allocating 50% Of Your Income To Needs
If you are earning £3,000 monthly, 50% of your income will be £1,500. Is this enough to cover your needs?
If you are renting a house as a family, the monthly rent would be around £2,500 on a 3 bedroom property. Both partners would have to work to cover this rent.
If you are a single person, renting out a room in a shared property, your monthly rent would be around £800. Let’s say that your utility bills are included in this.
As a single person:
You might spend around £400 monthly on food.
You might spend around £60 monthly on your mobile phone bill.
You might spend around £160 monthly on travel.
This does not leave much money for clothes, laundry, vitamins and medication.
As a family, unless you have bought your home many years ago, you will struggle to meet your needs using 50% of your income.
Allocating 30% Of Your Income To Wants
If you are earing £3,000 monthly, 30% of your income will be £900. This would be a nice amount to spend on your wants, but in reality it is not possible.
Even if you could spend £900 monthly on your wants, it would not go far. If you take your family out for a meal, it would cost you around £200. The average cost per person is around £50 in a good restaurant.
If you go out to eat 4 times a month, you will end up spending most of your wants budget. Entertainment has also become expensive due to the cost of living going up.
Most families end up not going out much and ordering fast food on occasions. The wants budget might allow you to order fast food on a few occasions, it will not allow you to experience fine dinning.
Shopping for clothes has also moved to needs rather than wants. We end up just buying the essentials, rather than fashion items. The wants budget does not leave much money to spend on hobbies.
Most people end up staying home and watching television or movies on apps like NetFlix. Going on holidays has also become really expensive and the wants budget does not stretch much to make them a reality.
Allocating 20% Of Your Income To Savings & Debts
If you are earning £3,000 monthly, 20% of your income will be £600. Investing £600 every month could enable you to create financial independence within 30 to 40 years.
Most people cannot invest much of this budget, as most of it goes in paying off loans and credit card debts. Most of this savings & debts budget ends up in the debt repayment side.
It is difficult to save £600 monthly from a £3,000 monthly income. The cost of living crisis is real, and it is taking away the joy from peoples lives.
Most people are using a credit card as a buffer to meet the increase in cost of living. Some people are not able to pay off their credit card balance, and end up piling on more debt.
The Reality Of The 50/30/20 Rule
In reality the 50/30/20 rule does not work anymore. Most people need to allocate around 70% to 90% to cover their needs. This does not leave much for wants or savings.
The vast majority of people in the UK are living from pay check to pay check. In the UK it should be pay cheque to pay cheque, but most people are paid directly into their bank account. You know what I mean by the term pay check to pay check!
The money usually runs out before the next pay day. This forces people to use their overdraft limits and credit cards. The reality is… most people are living on debt.
Every family member has to work to make ends meet. Some people in the UK don’t have savings over £10,000, a greater number don’t have any savings.
The wealthy have started to leave the UK, due to the tax increases. This leaves the working class the burden of having to meet the shortfall that is required for the country to function.
Most people work 50 to 60 hours weekly to just about keep afloat. A couple of decades ago, working a 35 hour job was sufficient to cover your living expenses and allow you to implement the 50/30/20 rule budget.
It looks like we are all trapped in this modern day slavery called a “job”. We work just to stay alive, without having the time or money to enjoy life.
Looking forward to retirement will put you into depression, as you will have much less money to cover your needs. The future looks bleak and it is not looking to change for a long time.
Is There A Way Out?
You could work a side hustle along side your current employment and earn another £1,000 in additional income. This would enable you to make up the extra income required to follow the 50/30/20 rule budgeting method.
In my opinion the most viable side hustle option is an online one. If you are working a full-time job, you don’t have much time to invest in a side hustle. The online business option allows you to start building an additional income stream whilst continuing to work in your current employment.
Some online business opportunities require you to invest thousands of pounds to get up an running. They also require a monthly subscription to an ecommerce platform and also additional marketing costs.
In this current economic climate, most people don’t have a large amount of capital to invest in starting an online business. Many try and generate income from affiliate marketing, drop shipping and print on demand, but these methods take a lot of time and effort.
The online business opportunity that I have stated working with costs only $10 monthly, which is approximately £7.65 monthly. You can now start your own global internet based business for less than £10 monthly.
This business model offers the best of affiliate marketing, direct sales, network marketing and membership sales. It is possible to build up a substantial monthly income using this low cost opportunity.
You can get yourself out of the rut by starting your own online business for less than £10 month monthly, actually only £7.65 monthly. Don’t tell me that you can’t afford to invest £7.65 monthly for the opportunity to create financial independence.
Are You Ready To Get Started?
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Click Here to get started now and start working with my global team of like minded people. Join a network of people from around the world who are working towards creating financial independence.
I want you to ask yourself the question “What’s stopping me from getting started with this online business?”.
I’m sure it’s not the money, as most people can afford £7.65 monthly.
It’s not the time, as you can build it at your own pace using the internet. The minimum you need is a mobile phone with internet access.
It can’t be the know how, is full training and support is provided.
The only thing that can be stopping you as a lack of belief in yourself and the fear of leaving the comfort-zone. Just take a step beyond your comfort-zone and you will find the path toward financial independence.
I do not provide personal investment or financial advice and I am not a qualified licensed investment advisor. I am documenting my online investment and financial journey and what’s working for me. Click Here to read disclaimer.
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