At Money Moksh, we think personal financial planning should be empowering and enjoyable. The classic 50/30/20 rule offers a straightforward way to budget smartly, secure your future, and still enjoy life.
What Is the 50/30/20 Rule ?
This budgeting method divides your after-tax income into three key categories :
50% for Needs : essentials like rent, groceries, utilities, and EMIs.
30% for Wants : enjoyable non-essentials like dining out, hobbies, or streaming subscriptions.
20% for Savings and Debt Repayment : building an emergency fund, investing, or paying off debts.
Originally popularized by Senator Elizabeth Warren, this framework helps you add discipline to your financial planning without making it overly complicated.
Why This Works for Indians As Personal Financial Planning
India’s diverse financial landscape needs flexible guidance. Many of us deal with changing incomes, festival-related spending, and rising living costs. The 50/30/20 rule provides a balanced approach :
Universally applicable : Whether you earn ₹25,000 or ₹2,50,000, the proportions are more important than the actual numbers.
Customizable : Freelancers or gig workers can average their income over several months and adjust their savings or discretionary spending as needed.
Lifestyle-sensitive : In expensive cities where rent or EMIs can consume 60% to 70%, the rule allows for adjustments instead of complete abandonment.
Real-Life Illustrations Of Personal Financial Planning
Rohit in Bengaluru earns an after-tax monthly income of ₹80,000. He spends ₹40,000 on needs (rent, groceries, utilities, EMI), ₹24,000 on wants (food, OTT, gifts), and ₹16,000 on savings and debt, which includes emergency funds, mutual funds, and extra loan repayments.
Priya, a freelancer in Jaipur, has a monthly income of ₹50,000. She sets aside ₹25,000 for necessities, ₹15,000 for leisure, and ₹10,000 for her emergency fund, PPF, and credit card dues. In higher-earning months, she adjusts the 20% savings buffer to account for leaner periods.
The Human Touch : Your Budget, Your Story
Think of the 50/30/20 rule as your financial foundation, not a strict set of rules :
Life is dynamic : Some months, family commitments or festivals (like Diwali or Durga Puja) may require larger ‘wants’ allocations. The goal is to be aware, not perfect.
Automate your peace of mind : Use SIPs for investments or set up automatic transfers to your savings to help you stick to your plan.
Check-ins matter : Take a moment each week or month to reflect—“Did I overspend? Did I save enough?”—to keep financial planning feeling supportive instead of burdensome.
Trending Now : News You Can Use
1. A Fresh Budgeting Formula Emerges
Recently, Indian media highlighted an alternative budgeting model: the 15-65-20 rule. In this model, 65% goes to everyday essentials, 15% to savings, and 20% to lifestyle expenses. This approach caters to those who spend significantly on a tight budget. While the 50/30/20 rule is powerful, being adaptable is key to smart personal financial planning.
2. Inflation : The Silent Wealth Eroder
A cautionary report from a CA notes that an expense costing ₹18 lakh today could rise to ₹1.37 crore in the future due to inflation. This highlights why the 20% savings portion needs to consider inflation—investing in options that outpace inflation is essential, rather than just keeping money in a basic savings account.
3. New Alternative : The 10-30-50 Rule
In Mango Millionaire, Edelweiss CEO Radhika Gupta introduces her “10-30-50 rule”: 10% for short-term expenses, 30% for medium-term needs, and 50% for long-term wealth creation. She emphasizes saving by default through automated deductions, reinforcing that financial habits matter more than the numbers.
Deep Dive : Making 50/30/20 Work for You
Calculate your actual take-home pay after TDS, PF, etc. Sort your expenses wisely :
Needs : rent, groceries, transport, insurance.
Wants : movies, dining, fashion, short trips.
Savings and Debt : including emergency funds, investments, and EMI.
Conduct a 90-day expense audit — awareness can help control overspending.
Automate wherever you can — set up your savings before you have a chance to rethink it.
Adjust, don’t abandon — if 50% for needs seems unrealistic in metro areas, borrow ideas from the 15-65-20 or 10-30-50 models, but always prioritize saving something.
Invest for growth, not just to stash cash—consider SIPs, PPF, and debt funds with inflation in mind.
Conclusion : The Balanced Journey of Money Moksh
At Money Moksh, we believe personal financial planning is about aligning with your values, not simply cutting back :
Live intentionally — set aside for essentials, allow for enjoyment (the ‘wants’), and build security (savings).
Stay flexible — changes in the economy or new budgeting ideas might shift your percentages but shouldn’t change your goals.
Act meaningfully — even a modest 20% savings habit can lead to wealth accumulation, peace of mind, and, eventually, financial freedom.
So start today. Create your own 50/30/20 (or 15/65/20 or 10/30/50) strategy. Let it guide you gently, adapt as your life changes, and establish a future grounded in discipline and enjoyment. When personal financial planning has a human touch, it goes beyond budgeting your money; it frees your life.