How should one budget? Where do I begin? Let me start by saying that personal finance is not a one size fits all kind of thing. Knowing that let’s pick a subject.
What should we call him? I’ve chosen him because men don’t really have that many expenses. You know that I’m right.
Let’s call him Alex.
I have a few assumptions about Alex. Alex is 24 years old. This is his first permanent and stable job. The job pays him ksh. 20,000 after taxes. His boss doesn’t have a medical cover for him yet. Alex has no dependents; he is not married yet. This young man occasionally sends something to his mother. He lives near his place of work therefore no transport cost. Maybe only the occasional Boda ride in the wee hours of the night. He is also a Christian. I know that you are wondering why all this is necessary. But I’ll get to that soon.
What else have I left out? Oh yes, just like many young people his age he has zero savings and zero investments.
Alex has decided to take control of his money situation. He has decided to tell his money where to go.
He has decided to stop wondering where his money goes off to. This means he has decided to start budgeting his income.
What is the 50/30/20 budgeting rule?
The 50/30/20 budgeting rule states that 50% of your income should go into your needs. This includes housing/ rent, paying utility bills (electricity and water bills), food, and so on.
30% of your income should go into satisfying your wants. That is fun and entertainment money.
20% of your income should go into savings and investments. That’s reasonable don’t you think?
Well in my experience with the rule, it isn’t 100% perfect. Therefore, it’s better to use it as a guideline.
Now back to our subject, Alex. How does Alex budget his ksh. 20,000 salary using the 50/30/20 budgeting rule?
How to budget ksh. 20,000 income.
According to the 50/30/20 budgeting rule, 50% of Alex’s income should go into his needs. 50% of Ksh. 20,000 is Ksh. 10,000.
This amount will go into paying Alex’s rent of Ksh. 3,500, utility bills (water and electricity) of ksh.500 per month, shopping of Ksh. 1,000 and buying food(groceries) for the month at KSH. 3,000 (ksh.100 per day). Remember that Alex is single.
This gives us a total of Ksh. 8,000. The extra ksh. 2,000 will go into the occasional Boda rides.
Sinking funds: How To save up for the festive season
30% goes into wants in the budget rule.
30% of ksh. 20,000 gives us ksh. 6,000.
This ksh.6, 000 will go into satisfying Alex’s cravings and the like. Wants are things that we can live without. Though we get a lot of satisfaction from them. This is fun and entertainment money.
For Alex, this amount will go into buying airtime for the month. He buys monthly Telkom bundles of Ksh. 1,000. That is 1GB per day. He also buys a monthly 1500 SMS from Safaricom at KSH. 100. The rest of the amount (KSH. 4,900) will go into eating out with friends and the occasional mutura.
Now down to 20%.
20% of the income should go to savings and investments according to the budget rule.
In Alex’s case 20% of ksh.20, 000 is ksh. 4,000.
Remember that Alex is a Christian therefore 10% of his income(ksh. 2000) goes into tithes.
He has decided that 5% will go into savings. That is ksh. 1,000 and 5% will go into investments. (ksh. 1,000). Alex has opted to invest ksh. 1,000 in a money market fund.
After doing his calculations, Alex noticed that he did not account for giving and health cover. He opted to draw this amount from the 30% wants section. He took ksh. 1000 to give his mother and ksh. 500 for the health cover.
I hope that you now understand why I said that the 50/30/20 budgeting rule is not perfect. Despite this shortcoming, I highly recommend this budgeting rule.
Get the free 50/30/20 budgeting template here.
In conclusion, budgeting is the first step towards taking control of your money situation.
If the numbers show an ugly reality, don’t give up. Make a plan and get out of the rut. All the best in your money endeavours.
30 thoughts on “How to budget income using the 50/30/20 rule.”
Hi! Someone in my Myspace group shared this website with us so I came to check it
out. I’m definitely enjoying the information. I’m bookmarking and will be tweeting this to my followers!
Excellent blog and excellent style and design.
Check out my blog – download 918kaya original
I do not even know how I ended up here, but I thought this post was good.
I do not know who you are but definitely you are going to a famous blogger
if you are not already 😉 Cheers!
On the other hand, these who program to bet consistently will notice the toll a higher vig can take on your bankroll more than time.
Wow, this article is fastidious, my younger sister
is analyzing these kinds of things, thus I am going to convey her.
Feel free to visit my web-site; jackpot Pussy888
Hello! Tһis is kind of off t᧐pic butt I need some guidancｅ from ann eѕtаblisһed blog.
Iѕ it tough too ѕet up your own blog? I’m not very
tecһincal but I can figᥙre things out prettү quick.
I’m thinking about ѕetting up my own but I’m not sure where to begin. Do you have any ideas
or suggestions? Thank you
Here is my webpazge payday loans same day deposit
Greate article. Keep writing such kind of info on your blog.
Im really impressed by your blog.[X-N-E-W-L-I-N-S-P-I-N-X]Hey there, You’ve performed a great job.
I’ll certainly digg it and personally recommend to my friends.
I’m sure they’ll be benefited from this site.
Here is my homepage :: http://www.jjsapido.com/fotografia/modules.php?name=Your_Account&op=userinfo&username=BohannonNola
Yay google is my world beater aided me to
find this great website!
Also visit my blog – https://mintjasia.com
Hi, i feel that i noticed you visited my weblog
thus i got here to ?go back the choose?.I am
attempting to find things to improve my web site!I
assume its good enough to use a few of your concepts!!
Take a look at my blog post; kebe.top
I am really ⅼoving the theme/design of your weblog. Do you ever run into any
internet browser compatibilіty issues? A small numЬer of myy blog readers have
complained aƄout my site not working сorrectly in Eⲭplorеr buut lߋoks greɑt іn Opеra.
Do you have any ideas to help fix this issue?
I am not real good with English but I find this very easygoing to translate.
Visit my website wiki.cowise.info
free personals
[url=”http://datingfreetns.com/?”]dating sites for over 50 [/url]
I don’t even know how I ended up right here, however I assumed
this publish was good. I don’t know who you’re but definitely you’re going to
a well-known blogger if you happen to are not already.
Cheers!
My webpage :: gamegamma.com.tw
Piece of writing writing is also a fun, if you be familiar with afterward
you can write or else it is difficult to write.
my web site ibbs.uu.cc
Thank you so much with regard to giving everyone an update on this subject on your site.
Please realize that if a brand new post becomes available or in case any improvements
occur to the current publication, I would be considering reading a lot more and learning how to make good usage of those
tactics you reveal. Thanks for your time and consideration of other folks by making this blog available.
My blog post … kebe.top
Thanks for every other informative web site. Where else may just I get that type of
information written in such an ideal approach? I’ve
a challenge that I am simply now running on, and I have been on the glance out for such information.
Also visit my web page :: http://www.soulmta.infora.hu/index.php?action=profile;u=357525
Hi, I do think this is an excellent web
site. I stumbledupon it 😉 I will come back yet again since i have book marked it.
Money and freedom is the best way to change,
may you be rich and continue to help others.
Here is my web page :: http://www.soulmta.infora.hu/index.php?action=profile;u=356643
dating
[url=”http://stfreeonlinedating.com/?”]chat websites to meet people [/url]
I was just looking for this info for a while. After 6 hours of continuous Googleing,
finally I got it in your site. I wonder what is the lack of
Google strategy that don’t rank this kind of informative sites in top of the
list. Usually the top websites are full of garbage.
Also visit my web-site; benjamindinh.fr
If some one needs to be updated with most recent technologies then he must be visit
this web page and be up to date every day.
Feel free to visit my site – pf-mold.com
Amazing! Its in fact awesome post, I have got much clear idea concerning from this article.
My blog post: http://www.hit-forum.info
This site truly has all of the information I needed about this subject and didn’t know who to ask.
Feel free to visit my website – cowerdesign.com
Fօr the reason that the admnin of this website is working,
no doubt veгy quicқly it will be well-known, duee to its quality сontents. http://imatranperhokalastajat.net/index.php/component/kide/-/index.php?option=com_kide
I blog freqսently and I reaⅼly apрreciate your information. This great article has reаlly
peaked myy interest. I will bookmark your
bkog and kewep checking for nnew details about once per week.
I subѕcribed tto your RSS feed as well. https://www.canalterranova.com.br/inundacoes-na-indonesia-causam-mais-tragedias/
Good bⅼog pօst. I ԁefiniteⅼʏ love this site. Keep writing! http://Frances.spinfilelnamesdat@tangshuai.com/member.asp?action=view&memName=RobStaples14949072
No matter if some one searches for his necessary thing, thus he/she wishes to be available that in detail, thus that thing is maintained over here.
Saya akan segera rebut rss feed Anda karena saya tidak
bisa
Ahaa, ini bagus percakapan tentang topik tulisan di tempat ini di situs
ini, saya sudah membaca semua itu, jadi saat ini saya juga berkomentar di sini .
my page … Daftar judi slot joker123 (gameaco.com)
great put up, very informative. I ponder why the other specialists of this sector do not
notice this. You should proceed your writing. I’m confident, you’ve a great
readers’ base already!
GO!!!
This phrase was said by the first cosmonaut on Earth – Yuri Gagarin. (Yuri Gagarin)
He was the first astronaut on Earth. He was Russian! …
Now Russia is becoming a strong country, gas pipelines, a vaccine against COVID-19, an army.
Is this very reminiscent of the communist Soviet Union?
How do you think?
Now we have total control in our country. I am interested in the opinion of foreigners.
Албонумисматико
ПОЕХАЛИ!!
GO!!!
This phrase was said by the first cosmonaut on Earth – Yuri Gagarin. (Yuri Gagarin)
He was the first astronaut on Earth. He was Russian! …
Now Russia is becoming a strong country, gas pipelines, a vaccine against COVID-19, an army.
Is this very reminiscent of the communist Soviet Union?
How do you think?
Now we have total control in our country. I am interested in the opinion of foreigners.
Албонумисматико
ПОЕХАЛИ!!
Pingback: How to budget KES10000 using the 50/30/20 budgeting method - Financebuddy