What is the rule of 50 – 30 – 20 for dividing the monthly salary?


If you are having trouble distributing your salary and following the monthly budget, you should find a way to help you manage your finances in proportion to your monthly salary.

Among these methods is to follow the 50-30-30 rule for dividing the monthly salary, which is characterized by its effectiveness in managing the budget and creating a surplus that contributes to increasing savings and reducing financial pressures, by dividing the monthly income into three parts that are allocated to basic and variable expenditures and future savings and investment plans.

What is the rule of 50 – 30 – 20 for dividing the monthly salary?

The 20-30-30 rule helps individuals manage their monthly budget by setting an actual framework for financial obligations and monthly expenditures in addition to allocating a portion of the salary to achieve their future financial goals, whether they are savings or investment without a budget deficit or increasing the number of monthly expenses than what is specified for it.
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How to divide the monthly salary?

Once received, the monthly salary is divided into three parts according to the rule 50 – 30 – 20, which is calculated as follows:

Allocating 50 percent of the salary for basic fixed expenses that meet the monthly needs; such as electricity and water bills, education expenses, health care expenses, transportation expenses, communication expenses, and others.

The size of these expenses varies from person to person according to several criteria such as standard of living, number of dependents, and monthly income.

The allocation of 30 percent of the salary for variable expenses; may be expressed as luxuries that contribute to raising the standard of living luxury, such as shopping, leisure activities, excursions, and gifts. The distribution of items for the variable expenses section may vary from month to month depending on the priority and the goal to be achieved.

Allocating at least 20 percent of the salary to future financial plans such as increasing savings, accelerating debt repayment, following an investment plan, or saving for emergencies.

Let’s take an example on the ground; we assume that there is a person who gets a monthly salary of 10,000 riyals, and wants to manage his monthly budget by following the rule 50 – 30 – 20 to divide the salary.

The first step: deducting an amount of 5,000 riyals to cover basic expenses such as monthly installments, housing expenses, utility bills, transportation expenses and others.

The second step: withholding 3,000 riyals to cover variable expenses such as shopping, travel, leisure activities, and others.

The third step: withholding at least 2,000 riyals to save, invest, or pay early debts.

Dividing the monthly salary in a proper way within the set budget gives you a comfortable financial life away from the financial pressures resulting from mismanagement of the salary and gives you the ability to face unexpected financial crises.

Whatever the method of dividing the monthly salary varies, it is necessary to adhere to the application of instructions and steps that help you achieve impressive results and reap the benefits of adhering to the monthly budget.


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