The 50,30,20 rule & how to use it during the cost of living crisis

Updated: Jul 9

Senator Elizabeth Warren was & is passionately educating & influencing Americans to feel in control of their finances.

She created this rule of thumb so that every citizen could realise their dreams of debt repayments, buying their first home, starting a new business and many more financial goals.

It's a simple but effective way of portion control with your income to outgoings, creating a ratio that works for your situation.


50% of your income is allocated to your needs

30% on the things you want to buy

20% on your goals.


Your goals are the powerhouse of future you, driving you forward with such purpose you can't fail to feel inspired & motivated.

What are yours?

And the future can be next year, it can be 5 years it can be 20 years, it doesn't matter.

Having something to work towards, having a dream, a vision is so important when living your "best life"


So when looking at your own ratio's, how do they sit?

When you look at your "needs" list and realise that perhaps they have more "wants" on there than strictly necessary it gets you to evaluate your desired lifestyle.

We all need to eat right?

But when I go to Tesco's I suspect £40 of the £80 I spend is what I want not what I need.

Somehow a candle, or flowers, crisps, chocolate or 6 bottles of wine always ends up in my trolley. I don't need any of them but I do want them & that's perfectly ok!

Just surviving isn't much fun, we all want lovely things & I'm sure you work damned hard enough too!


Justifying it to yourself is up to you - but when you know you need to take a good long look at every penny like a good bookkeeper will do for business owners, this is one of those moments when you do need to be honest with yourself. Are you wasting money in the supermarket? More on that and food planning another time...


So, is your ratio more 70,25,5 this year?

Are you putting anything towards future you?

Have you looked yet at your budget for the Autumn > when energy goes up another 64% (unless you book in a phone appt with me I can get it for you for only 27% increase via UW)

Other prices are soaring as well you know, you can't escape the cost of living crisis stories online or in the news.




If you need a resource to help you do this really easily with step by step guidance so you don't feel overwhelmed or lost, please take a look here:


If you go blindly into the back quarter of the year without too much of a plan then it's going to sting harder than it needs to.

If you're really in trouble or heading for it, please go straight to experts who can give you advice of how to make your next move.

Do not struggle alone.


https://www.stepchange.org/

https://www.citizensadvice.org.uk/

Are two great places to start.


I've just joined forces with FinWELL as a Financial Wellbeing Specialist and it's an awful truth that worrying about finances contributes massively to depression & suicide particularly in Men aged 40+

So do not delay in seeking help.


If you know that to live the lifestyle you have now, is likely to cost you £300+ more a month than last Autumn, then making a plan now to understand more fully how to cut your cloth differently will make a huge difference practically as well as emotionally for you.


Using my cashflow style budgeting worksheets will show you very simply what you need to know.

You'll quickly see what is left over each month when you factor in your higher mortgage repayments, utilities, food, fuel etc and enable you to make different spending decisions.


Need some help?




We're in this together


Love from Lucy

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