| Eve & Elle Admin
“Money looks better in the bank than on your feet.” - Sophia Amoruso
When asked about her success, Sophia Amoruso loves to say, “Money looks better in the bank than on your feet.” In her book the founder of NastyGal and Girlboss Media, states it is essential to know how to manage your money. The 50/20/20 rule is a great way to set up a budget but also to understand where you are over or underpaying relative to your income. This method showed me I was spending way too much on food and should be saving more. Check it out for yourself and let me know if this method works for you.
1# 50 out of the 50/20/30 rule
50 percent of your income should go to your fixed expenses. The things you need to live your life. The breakdown of this 50% should roughly be as follows:
- 30% housing (rent or mortgage)
- 10% groceries, toiletries, etc
- 5% electricity, water, gas bills
- 5% to transportation/ parking
If these costs combined go over 50% of your income, you are living above your paycheck. This will make it much harder to invest in yourself by saving and will set you up for a paycheck-to-paycheck life.
2# 20 out of the 50/20/30 rule
20 percent of your income should go to your financial goals. You should invest in yourself by setting up some savings and investments. These 20% should be divided in a way that contributes to your personal money goals. For instance mine are divided as 5% towards emergency fund, 5% towards investments, 5% towards savings and 5% towards down-payment savings for a house.
3# 30 out of the 50/20/30 rule
So the goal is...
Getting more value out of your finances. So it’s time to start investing in yourself instead of your shoe collection. Did you know about the 50/20/30 rule, or are you just finding out? Do you feel it will help you with budgeting and the organization of your financial life? Let us know in the comments.