The 50-30-20 rule allows you to manage your monthly budget while enjoying yourself and saving. Here’s how to put it into practice every day.
For most French people, the end of the month is difficult, between bills to pay, daily expenses and food shopping… Very often, households are short on funds for small hobbies or to put money aside. The 50-30-20 rule is a simple method to manage your monthly budget in a balanced way and the advantage is that it can be adapted to low salaries.
This rule, developed in 2005 by American senator Elisabeth Warren, is based on three categories of expenses. First, you just need to dedicate 50% of your budget to essential needs, i.e. all the unavoidable expenses such as rent, electricity and water bills, groceries, transport and insurance. For example, if you earn 1,500 euros net per month, you should dedicate around 750 euros to these basic expenses.
You could then dedicate 30% of your salary to so-called “pleasure” expenses, such as going out, hobbies, vacations or subscriptions to streaming services. With an income of 1,500 euros, this represents 450 euros that you can allocate to these little luxuries without feeling guilty. Finally, the remaining 20% can be saved or, depending on your situation, devoted to repaying your debts or credits. With a monthly income of 1,500 euros, this corresponds to 300 euros to save for a project or build up an emergency fund.
For low-income earners, the 50-30-20 rule may seem difficult to follow, as essential expenses often take up a larger share of income, but this method can be adapted. For example, for a salary of €1,200, you should allocate 60% of your expenses to essential needs, or €720, 20% to leisure, or €240, and 10% to savings, or €120 maximum. The important thing is to adjust the percentages according to your personal situation, while trying to keep a part for savings, even modest, in order to deal with unexpected expenses.