Why Smart Singaporeans Are Using The 50/30/20 Rule For Bugeting


If you’re like most people, budgeting is probably not your favourite thing. It can be tedious and time-consuming. But it’s a necessary evil if you want to keep your finances in order.

And believe it or not, there is a budgeting strategy that can make the process a lot easier – the 50/30/20 Rule.

This method suggests that you allocate 50% of your income to essentials, 30% to discretionary spending, and 20% to savings.

This strategy has been proven to help people save money and stay out of debt. This blog post will discuss the 50/30/20 budgeting rule and how you can use it to improve your finances.

What Is the 50/30/20 Rule?

The 50/30/20 Rule is a budgeting method that helps you keep spending in line with your financial goals. The technique is simple:

  • 50% of your income should go towards essential expenses
  • 30% should go towards non-essential expenses
  • 20% should be saved or invested

While the percentages may vary depending on your circumstances, the 50/30/20 Rule is a good starting point for creating a budget that works for you. And, who knows, maybe you’ll even find that you can save more than 20%.

Budgeting Basics

Budgeting can be a tricky business. There are many different ways to approach it, and everyone’s needs are different. But there are a few basics that you should keep in mind when budgeting for your financial wellbeing.

First, you need to figure out your income and where it’s coming from.

This step may seem useless, but it’s essential to be clear about your sources of income to track your budget more effectively.

Next, you need to identify your expenses.

This step includes both regular and irregular expenses plus one-time purchases. Once you know where your money is going, you can make adjustments to ensure that your budget is sustainable.

Last but not least, you need to be realistic about your budget.

It’s essential to set realistic goals that you can achieve. If you try to cut too many corners, you’ll quickly become frustrated and give up on budgeting altogether.

Keep these tips in mind, and budgeting will become a breeze!


After figuring out your income sources, you have to estimate your expenses. That’s the most challenging part of budgeting.

Necessary Expense (50%)

Necessary expenses represent the bare minimum you need. This category includes:

  • Rent
  • Mortgage payments
  • Food
  • Utilities
  • Transportation
  • Minimum payments on debts

While it may be tempting to cut back on necessary expenses to save money, it can often backfire. If you cut back too much, you may find yourself unable to meet your basic needs or make ends meet.

Remember: It’s essential to consider what is genuinely necessary before making any cuts.

By budgeting carefully, you can ensure that your necessary expenses are covered without putting undue strain on your finances.

Discretionary Expenses (30%)

Discretionary expenses represent those costs that are not essential to your survival or wellbeing but which you choose to incur nonetheless. In budgeting terms, they are often referred to as “luxuries” or “non-essentials.”

This distinction between needs and wants can help you prioritise your spending and allocate your resources more efficiently.

Remember: What is considered a discretionary expense will vary from person to person.

What is a necessity for some is a luxury for others. The key is to be mindful of your spending habits and priorities, budgeting accordingly.

Savings (20%)

Savings represent an essential component of budgeting because:

  • Savings provide a buffer against unexpected expenses and financial emergencies.
  • They also give you the flexibility to choose how to spend your money. When you have savings, you can choose to spend your money on things that are important to you or save it for a rainy day.
  • Having savings gives you the peace of mind to know you have a safety net in place.

So, when it comes to budgeting, be sure to include savings as a critical component. The 50/30/20 Rule will help you weather any financial storms that come your way because you always put aside 20% of your income.

50/30/20 Rule Advantages

The 50/30/20 Rule has many benefits:

Financial Discipline

The 50/30/20 Rule is a simple way to budget your money and instil financial discipline. By following this method, you can ensure that you are living within your means and spending your money in a deliberate way.

Additionally, the 50/30/20 Rule can help you make smart choices about your finances, such as prioritising savings over spending. In tough economic times, the 50/30/20 Rule can be a valuable tool for helping you to stay disciplined with your budget and make the most of your money.

Imagine the things you can do with the money you save:

  • Open a trust fund for your kids
  • Buy your dream car
  • Go on a luxury vacation
  • Pay your debt
  • Start investing
  • And many more


The 50/30/20 Rule is a simple way to budget and become debt-free.

Setting aside money in different proportions according to each expense category means you will always have money left over to put towards your debt.

The method also helps you budget for your wants to don’t overspend and end up in debt.

That’s how you can pay all of your instalments comfortably and without making unnecessary sacrifices.

Wrap Up

The 50/30/20 Rule is a budgeting method that can help you reach your financial goals and respect your values. The technique is simple: 50% of your income should go towards essential expenses, 30% towards discretionary costs, and 20% towards savings and debt repayment.

This method can be helpful because it provides a clear framework for budgeting.

It can also keep you from overspending on non-essential items. Additionally, the 50/30/20 Rule can build up your savings to have a cushion in case of an emergency.

Overall, the 50/30/20 Rule is a helpful tool that can assist you in achieving your financial goals.

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