How to Use the 50/30/20 Budgeting Rule

How to Use the 50/30/20 Budgeting Rule - Tom Bible Law

The 50/30/20 budgeting rule is a powerful financial tool that can help you achieve a balance between saving and spending. This includes spending money on what you want while also covering your bills. Learning this skill could help you escape debt or achieve long-sought-out financial goals. However, if you feel like your finances are in serious trouble, then consider asking a Tullahoma bankruptcy lawyer for help.


The 50/30/20 budgeting rule breaks down the income you make into three different categories. These three categories are fixed expenses, savings and debt, and flexible spending. According to this budgeting rule, 50% of your income will go to fixed expenses which include monthly required payments like:

  • Utility bills
  • House or rent payments
  • Car payments

This also includes food and any other necessary expenses to live. These are the expenses that are non-negotiable and often expenses we have very little control over. If a payment is missed on rent, for example, there could be consequences. For this reason, the majority of a person’s income goes into these costs.

Savings and debt repayment fall into the 20% category. In other words, this rule recommends you take 20% of your income and split this into monthly debt payments while leaving the rest of the money in a savings account. This may vary depending on what debt you have and how much money you want to be saved up.

Lastly, this rule says that 30% of income can go to flexible spending. This category includes spending on leisure activities that are under your control. Traveling costs, entertainment, and going out to eat are common examples. In this sense, you are still able to have money left to buy what you want.


To make the 50/30/20 budgeting rule work for you, start with a budget plan. Start your budget plan by taking an inventory of your finances. List your monthly expenses and costs and then subtract them to see what money is left over. This will tell you if you are making enough money or allocating enough money to cover your basic expenses.

If you notice that flexible spending is not leaving enough money for bills or debt, then start cutting expenses you can let go of. Something that can help motivate you to cut expenses is having savings goals. Common examples of savings goals include retirement, building an emergency fund, and paying off certain debts.

You can use these savings goals to guide how much money you need to save by specific deadlines. Calculating how much money you need to be saved up by those times can help you know what expenses to cut. Then you can adjust your budgeting rule to achieve these goals.


Do not panic if you still find your finances draining despite using the 50/30/20 budgeting rule. Start by contacting us today at Tom Bible Law at (423) 690-7712 for a consultation about your finances. Our experienced Tennessee bankruptcy attorneys can work with you to help you overcome your financial dilemma through bankruptcy. We are located throughout the Tennessee cities of Chattanooga and Tullahoma.

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