Understanding the 50/30/20 Rule

What is the primary purpose of the 50/30/20 rule?

• To categorize spending into needs, wants, and savings

• To divide your income into savings, investments, and expenses

• To eliminate all discretionary spending

• To increase your income

Which of the following is considered a 'want' under the 50/30/20 rule?

• Groceries

• Rent or mortgage

• Netflix subscription

• Health insurance

What is the recommended percentage of income to allocate for savings and debt repayment?

• 50%

• 30%

• 20%

• 10%

If your needs exceed 50% of your income, what is a suggested course of action?

• Ignore the rule and continue spending

• Increase your spending on wants

• Look for ways to reduce expenses

• Stop saving altogether

What is a key strategy for someone who finds saving 20% of their income challenging?

• Borrow money to save

• Ignore savings and focus on wants

• Wait until income increases to start saving

• Start saving a small percentage and gradually increase