50-20-30

Matthewpatton

I am wondering if there are any set rules or guidelines about how much of your salary you should spend on things. I have heard of the 50-20-30 formula where you are supposed to spend 50% on housing and bills, 20 savings, 30 spend. Is this still relevant? Certainly I can't save 20%. But, for example, if I earn 27k per year, how much should I have spent on a car? Similar for fuel?
One of the reasons I am asking is because I have saved about £200 A month not going to work on fuel. That's about 10% of my monthly income, just on fuel, which seems a lot.
What do you all think?
Matt.

Willing2Learn

Why not post up your completed Statement of Affairs (SOA) into this thread?  We can take a look at it, advising accordingly.  We may be able to help you set yourself a realistic and doable monthly budget. 

https://www.lemonfool.co.uk/financecalculators/soa.php

Edit:  And there is no set formula.  Your monthly budget will be a reflection of where you live, your income, your contractual obligations, assets etc 

pjcox2005

Likewise it's what matters to you in life.

For example, i don't really care about type of car so on your income I would buy a cheap, economical run around unless you need lots of space for family, big boot for example. I'd also see £200 a month as quite high so would consider moving closer to work particularly if I rent and there were no real ties to an area (e.g. family, friend sets). That advice would change if you had kids at school for example so mileage couldn't be avoided.

Personally i'd do a budget of where your money currently goes, work out what you want and then adjust your budget to fit. I'd prioritise pension and house saving above takeaways/some going out for example (not saying they are equal amounts but an idea of the compromise) if i didn't have either or both were low. If i had a good pension/high likelihood of inheritance then it may not be as important.

Just be deliberate with your plans and money so you use it as best you can.

Highland76

Reading the thread title, I thought this was going to be a sort code related thread....

Malkytheheed

I hate these "rules" because they don't work. Everyone is different. 
I am in my thirties and have just bought our second, bigger home now. I can assure you more than 50% of my household and bills. Much more. 

But equally if I am still paying 50% on my household and bills when I am in my 80s then something has gone horribly wrong. 

Rules just dont work. Everyone has different circumstances, priorities and is at a different stage of their life. 

The only 2 rules you can possibly have are to live within your means and have an emergency fund.