The 50-30-20 rule.

[Niyi]

The 50-30-20 rule is a personal finance guideline that suggests dividing your after-tax income into three categories: 50% for necessities, 30% for wants, and 20% for savings and debt repayment.

The idea is to ensure that you are allocating enough money towards essential expenses, while also setting aside money for future goals and avoiding overspending on non-essential items. It is not a strict rule, but it is a basic principle to help people plan their finances and budgeting.

 

[Kane]

This is a very popular method of managing your finances, however, for most people, especially people who have a small income, this rule does not work. That's because their income will be barely enough to pay for necessities and they are unable to maintain their necessities with 50 percent income, and they are also not able to save 20 percewnt on a regular basis.