How to Allocate your Monthly Salary

Remember the popular 50.30.20 budget? Do you feel it’s appropriate for you?

Last weekend, someone in the Tribe asked why he should allocate only 20% of his salary to savings/investments. He felt it was too small.

I just want to point out that the 50.30.20 budget is only a guide. You can spin it anyhow you want.
The important takeaway is you need to have a structure that works for you in terms of where you are financially and where you want to get to as well as the things that are important to you.

Here I share about 4 systems:

50.30.20 – I call this the balanced budget basically because all the main allocations are close together.

50.20.10.20 – This is basically the balanced budget but with a dedicated allocation to giving.

30.20.10.40 (Aggressive Saver)- This could work for a dual income family. It could also work for families that live in their own house and don’t have to pay a rent or mortgage.

30.10.10.50 (Extreme Saver) – This could be a typical graduate on his/her first job and living with their parents. It could also be someone looking to hit financial independence very fast.

Just to reiterate, you can spin the ratios anyhow you want. So long as you have an allocation for savings and investments and you want that to be at least 10-20%. The rest you can change as you please.

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