Lesson 3 of 5 · 5 min read
Budgeting: 50/30/20
Before you invest, there has to be money left over. The 50/30/20 rule is a simple way to get a grip.
The split
Divide your net income into three pots: 50% for necessities (rent, food, insurance), 30% for fun things (eating out, hobbies) and 20% for saving + investing. That last 20% is your wealth engine.
Pay yourself first
Set aside your 20% automatically as soon as your salary comes in — before you start spending. This is called 'pay yourself first'. What you don't see, you don't spend, and you invest consistently.
Adapt it to yourself
The percentages are a guideline, not a law. If you live cheaply, you might be able to invest 30%. If you have high fixed costs, start with 5% and build up. Consistency matters more than the exact number.
Remember this
- 50% necessities, 30% fun things, 20% saving and investing — that 20% is your wealth engine.
- 'Pay yourself first': set aside your 20% automatically as soon as your salary comes in.
- The percentages are a guideline; adapt them to your situation.
- Setting money aside consistently counts more than the exact number.
There is a quiz for this lesson
3 questions that check whether it stuck. They live in the app, because a quiz nobody grades teaches nothing.
Want to practise, not just read?
Stockedin teaches investing in short lessons, with €10,000 in demo money to make your mistakes with. Stocky, the AI coach, explains anything you get stuck on.