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My brother-in-law swore the 50/30/20 rule would fix my money, and it did... until it didn't
He sat me down in his Denver kitchen 8 months ago and told me to split my paycheck 50% needs, 30% wants, 20% savings, and for the first 3 checks I felt like a genius with $340 landing in savings each time. Problem is my rent eats 52% of my take-home by itself, so the 20% only worked when I skipped groceries and my car registration hit in April and blew the whole thing up. So do I cram myself into a rule that doesn't fit my actual bills, or is there a better split for people in high rent cities?
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rowan5936d ago
I used to be one of those people who told everyone the 50/30/20 rule was gospel (my cousin got the same lecture from me over coffee two years ago). Then my sister moved to San Francisco and I watched her try to make it work on a $72k salary with $2,400 rent, and it fell apart fast. The rule was built for people paying maybe 25-30% of their pay on housing, not 52% like you, so no wonder the math broke. What changed my mind was seeing her stop saving anything at all because the rule made her feel like a failure instead of just adjusting the numbers. A better split for high rent cities is usually something like 60/20/20 or even 65/15/20, where you keep the savings habit but stop pretending rent belongs in that 50% box. Your car registration and groceries are not "wants" you can wish away, they are real costs, so build the split around your life instead of twisting your life to fit some guy's chart.
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