The "golden rule of 30," when referring to personal finance and budgeting, is commonly understood as part of the 50/30/20 rule, where 30% of your income should be allocated to "wants".
Here's a breakdown of the 50/30/20 budgeting rule:
- 50% - Needs: This covers essential expenses such as housing, transportation, food, utilities, and insurance.
- 30% - Wants: This category includes non-essential spending, like dining out, entertainment, hobbies, and travel. This is the portion that's commonly referred to as the "30" in the "golden rule of 30".
- 20% - Savings & Debt Repayment: This portion is dedicated to savings, investments, and paying down debt (credit cards, loans, etc.).
Essentially, the "golden rule of 30" emphasizes that while budgeting, you should allocate roughly 30% of your income to discretionary spending or "wants." This provides a balance between covering essential expenses and enjoying your money.
