Ever looked at your bank balance mid-month and thought, “Where did all my salary go?”
Yep, we’ve all been there.
If you want to take control of your monthly income without diving deep into complex spreadsheets, let me introduce you to a life-changing, simple budgeting formula—the 50/30/20 Rule.
Let’s break it down (with some Indian salary examples, of course).
📊 What is the 50/30/20 Rule
It’s a super easy way to divide your monthly salary into three buckets:
- 🧾 50% for Needs
- 🎉 30% for Wants
- 💰 20% for Savings & Investments
That’s it! No rocket science.
You just categorize your expenses—and stick to the limit.
💼 Let’s Take an Example: Monthly Salary ₹60,000
| Category | Percentage | Amount (₹) | What it Covers |
|---|---|---|---|
| 🧾 Needs | 50% | ₹30,000 | Rent, groceries, utility bills, EMIs, transport |
| 🎉 Wants | 30% | ₹18,000 | Dining out, Netflix, shopping, weekend trips |
| 💰 Savings & Investments | 20% | ₹12,000 | SIPs, PPF, NPS, emergency fund, insurance |
✅ What Counts as “Needs”?
These are the non-negotiables—expenses you can’t avoid.
Examples:
- Rent or home loan EMI
- Groceries and daily essentials
- Electricity, water, phone, internet
- Loan repayments
- Basic transport (bus, metro, fuel)
🛑 Avoid stuffing lifestyle expenses into this section. Your Swiggy bills don’t count as “needs”!
🎁 What are “Wants”?
These are things that make life better—but you can live without them.
Examples:
- Dining out
- Online shopping
- Weekend getaways
- Subscriptions: Netflix, Spotify, etc.
- Buying gadgets, fashion, or accessories
💡 Think of this as your “fun fund.” Spend freely—but within the 30% limit.
🪙 What Goes Under “Savings & Investments”?
Here’s where the magic happens. This 20% is what builds your future wealth.
Put this portion into:
- 💹 Mutual Fund SIPs
- 🏦 PPF or Recurring Deposits
- 🏥 Health insurance
- 🛡️ Term life insurance
- 🧯 Emergency fund
💬 “But I can’t save 20%, I barely manage 5%!”
That’s okay. Start with what you can, even 5% is better than nothing. Just build from there.
🧠 Why the 50/30/20 Rule Works So Well
✅ It’s easy to understand
✅ It keeps your lifestyle balanced
✅ It forces you to save first, not spend first
✅ It prevents overspending without guilt
✅ It adapts to any salary level—from ₹20K to ₹2L+
🛠️ How to Get Started Today
- Check your monthly in-hand salary
- Note your fixed expenses (rent, bills, EMIs)
- Use budgeting apps like Walnut, Moneyfy, or Excel
- Automate savings & SIPs—make saving effortless
- Review monthly to stay on track
📌 Sample Monthly Breakdown: ₹40,000 Salary
| Category | % | Amount (₹) | Sample Items |
|---|---|---|---|
| Needs | 50 | ₹20,000 | Rent ₹10K, groceries ₹5K, bills ₹3K, commute ₹2K |
| Wants | 30 | ₹12,000 | Movies, eating out, online shopping |
| Savings | 20 | ₹8,000 | SIP ₹4K, PPF ₹2K, insurance ₹2K |
🙋♀️ FAQs
Q: I live in a metro and rent is high. Can I tweak the rule?
Yes! You can do 60/20/20 or even 70/20/10 if needed. The idea is to stay consistent and grow your savings over time.
Q: Should loan EMIs go in “Needs” or “Savings”?
Loan EMIs (like personal loans or bike loans) go under Needs, unless it’s a home loan building equity—then it’s a mix.
🎯 Final Thoughts
You don’t need to be a financial wizard to manage your money. You just need a plan—and the 50/30/20 rule is a great place to start.
With a little structure, you’ll stop wondering where your salary vanished—and start owning your financial journey.
💬 Have you tried this rule before? Planning to start? Let me know in the comments below!
📅 Tomorrow’s topic: Top Budgeting Apps for Salaried Indians (2025 Edition) — don’t miss it!
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