Budgeting strategy: 50-30-20 rule

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Money management is a crucial skill that everyone should learn, and it’s never too early to start! For young teens and adults who are just beginning to earn or receive an allowance, understanding how to budget is a valuable skill that will set them on the path to financial success.

One simple and effective budgeting strategy is the 50-30-20 rule. In this blog post, we’ll break down this budgeting strategy in simple terms to help young teens take control of their finances.

What is the 50-30-20 Rule?

The 50-30-20 rule is a straightforward budgeting guideline that helps allocate your income into 3 categories: needs, wants, and savings. Here’s a breakdown:

1. 50% - Needs

The first 50% of your budget should go towards your needs. These are essential expenses that you can’t live without, such as housing, food, transportation, and basic clothing.

In other words, it covers the stuff you need to survive and go about your daily life.

2. 30% - Wants

The next 30% is for your wants. These are the things that make life enjoyable but aren’t absolute necessities. This category includes entertainment, hobbies, dining out, and other non-essential expenses. It’s about balancing the fun stuff without jeopardizing your financial stability.

3. 20% - Savings

Finally, dedicate 20% of your income to savings. This can be for short-term goals, like buying a new iPad or going on a trip, as well as long-term goals such as saving for college or your first car.

Savings provide a financial safety net for unexpected expenses and help you build a foundation for future financial success.

Applying the 50-30-20 Rule:
1. Identifying your income

Determine how much money you have coming in regularly, whether it’s an allowance, money from a part-time job, or gifts. This is your starting point for budgeting.

2. Categorize your expenses

Differentiate between your needs and wants. Needs are crucial for your well-being, while wants are nice-to-haves that add enjoyment to your life.

3. Allocate the percentages

Using the 50-30-20 rule, allocate 50% to needs, 40% to wants, and 20% savings.

For example, if you earn SR 100, SR 50 goes to needs, SR 30 goes to wants, and SR 20 goes to savings.

4. Track your spending

Keep an eye on your spending to ensure you’re staying within the budgeted percentages. There are apps and tools that can help you track expenses and manage your money effectively.


The 50-30-20 budgeting rule is a simple yet powerful tool for young teens to manage their money wisely. By prioritizing needs, wants, and savings everyone can strike a balance between enjoying life now and securing their financial future.

Developing good money habits early on will set the stage for a lifetime of financial success and independence.

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