reduce fixed costs
Check the basic expenses at regular intervals. Can you really afford your rent? Is there a cheaper worshiper for electricity or gas? Are all insurances necessary? Use consumer portals and comparison portals such as Check24 or Verivox. A separate household account to which you transfer 50 percent of your income by standing order can be helpful. It is important to differentiate exactly what basic needs are and what expenses enrich life but are not necessary.
keep a household book
You can get a good overview by keeping a household book. It contains current and future expenses. In this way, changes (to the previous months) can be checked and the budget can be planned. Bargain foxes also discover some savings potential.
Plan expenses ahead
Some expenses are unexpected, but much can be foreseen in advance. The fridge is ten years old, the car sputters? Plan ahead for such expenses. Set aside an amount of the savings portion or reduce expenses for personal needs for a while in order to have additional money at your disposal.
build nest egg
Long-term investment and returns are an important part of the 50-30-20 rule. Initially, however, the focus should be on building a financial nest egg. Rule of thumb: Set aside enough money to cover three to six months of ongoing expenses. This way you are prepared for emergencies and have a financial reserve. Set up a standing order on a savings or call money account until your nest egg is reached.
avoid exceptions
Don’t make exceptions to the 50-30-20 rule. Your net income is divided into the areas. This also applies to Christmas or vacation pay . If you keep making exceptions or pushing the boundaries, the system can’t work.
Maintain savings rate
A common mistake: if there are problems with the budget, the savings rate is reduced. Instead, question the other costs. This may mean a small incision or cost quality of life – but in the long term you will gain financial freedom . Don’t save on saving!
50-30-20 rule: financial planning app
You can further optimize your financial planning according to the 50-30-20 rule with the help of financial planning apps. Corresponding programs can be found in the Appstore. Well-known examples are “MyBudget”, “Moneywyn” or “Mint.com”. There you can even enter the expenses for each family member individually in the categories fixed costs, personal expenses and savings. You will be shown what percentage makes up what percentage and whether you are complying with the 50-30-20 rule.
50-30-20 rule: an alternative to saving
The 50-30-20 rule is a common and popular option for financial optimization and long-term wealth accumulation, but it’s not the only option. Various alternatives bring order to the financial chaos with different areas of spending or different allocations. What almost all of them have in common: It doesn’t work without a fixed savings and investment quota.
In other words , there must be money left over at the end of the month. If you use up all your income, there will be nothing left over the long term. Then there are only two options: increase earnings or reduce expenses.
60-30-10 rule as an alternative
An alternative that is similar to the 50-30-20 rule is the 60-30-10 rule. You split your salary into three different accounts, which are used for different purposes.
- Consumption (60 percent)
Most of your income is spent on consumption. This part describes all monthly fixed costs, but also additional expenses for free time or other purchases. From this account you pay all running costs and cover your living expenses. - Investment (30 percent)
A comparatively large part of 30 percent is reserved for investments in this concept. This includes direct financial products and investments in shares – but also personal training to expand your skills and build up knowledge. - Save (10 percent)
The last 10 percent is your savings rate, according to the 60-30-10 rule. You put some of this aside for short-term emergencies and build up the nest egg mentioned above.
Advantage of this method: You invest a large part of your income and can thus make significant investments over several years. But the whole thing also has a big catch: you only have 60 percent of your income to live on.