Managing Money with the 50-30-20 Rule

Introduction

• Presented by Marco from Whiteboard Finance.
• Focus on personal finance and wealth building.
• Recent poll results about desired content:
  • 30% personal finance
  • 22% stock market
  • 18% cars
  • 17% real estate investing
  • 13% making money online

The 50-30-20 Rule

• A budgeting strategy to manage money effectively.
• Breakdown of income after taxes (net income):
  • 50% Needs
  • 30% Wants
  • 20% Savings/Debt Payment

1. 50% Needs

• Definition: Essential expenses that are unavoidable.
• Examples:
  • Housing (mortgage/rent)
  • Groceries
  • Health insurance
  • Utilities (electricity, water, etc.)
• Needs are anything that would cause great inconvenience if not met.

2. 30% Wants

• Definition: Non-essential expenses that improve quality of life.
• Examples:
  • Dining out
  • Shopping for clothes
  • Hobbies (gardening, video editing, etc.)
• Wants are more about comfort and enjoyment rather than survival.

3. 20% Savings/Debt Payment

• Importance of saving and managing debt.
• Savings Strategies:
  • Emergency fund: Aim for 6 to 12 months of living expenses.
  • Example: If needs and some wants total $2,000/month, save $12,000 to $24,000 for emergencies.
• Debt Management:
  • Focus on paying off credit cards, student loans, etc.
  • Future video topics: debt avalanche and debt snowball methods.
• Emphasis on retirement savings: Many Americans are underprepared.

Conclusion

• Importance of creating a monthly budget using the 50-30-20 rule.
• Encourages sharing this knowledge with friends and family to help them benefit from personal finance education.
• Expressed appreciation for audience engagement and support.