What is the 50/30/20 rule? Aussie couple with a net worth of $770,000 share the budgeting rule they swear by
Living pay cheque to pay cheque can be challenging, especially if you’re trying to save money.
But a Sydney couple with a combined net worth of $770,000 have revealed a simple budgeting method they use to help them take control of their finances — without sacrificing the little luxuries.
Queenie Tan, 27, and her fiancé Pablo Bizzini, 32, have been budgeting their combined $150,000 salary all year round using the 50/30/20 rule.
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The pair split their monthly income into just three categories: 50 per cent on “needs”, 30 per cent on “wants” and 20 per cent on savings and investments.
“I love that it helps give you balance in your budget,” Queenie tells 7Life.
“I’ve saved around $120,000 from using the 50/30/20 rule. And it helped me save a deposit for my first home.
“It’s a simple guide and I think it helps ensure you can still have fun, but you’re also setting aside money for your future self.”
Queenie Tan, 27, and her fiancé Pablo Bizzini, 32, have been budgeting their salary all year round using the 50/30/20 rule. Credit: Belem Prado/SuppliedThe pair split their monthly income into three categories: 50% on ‘needs’, 30% on ‘wants’ and 20% on savings and investments. Credit: Invest with Queenie
The content-creating couple run an online finance business so they pay themselves an annual salary of $75,000 each.
They take home $9770 combined ($4885 each), after tax, per month.
For living expenses, the pair — who own a property together — spend $2734 on their mortgage, $280 on strata, $180 on utilities and $800 on groceries every month.
They allocate 30 per cent of their income towards “fun” leisurely spendings — including dining out, clothes and travel — allowing them to enjoy life without compromising their financial security.
“Having ‘fun’ money allows you to enjoy life and reward yourself without feeling guilty,” Queenie says.
“I love trying new restaurants and cafes, seeing friends, travelling and experiences like music festivals — although, I haven’t been able to do that as much since I’m pregnant.
“We’re not going to live forever, so it’s important to set aside time and money for fun.
“But we also don’t want to be struggling with money in the future and it’s good to have some cash saved to fall back on.
“It’s important to strike a balance between saving for the future and enjoying the present.”
The couple pay themselves an annual salary of $75,000 each as they are business owners. Credit: Invest with QueenieQueenie says the 50/30/20 rule has changed their lives because they have been making progress towards a brighter financial future. Credit: Invest with Queenie
Finally, the couple stash away 20 per cent of their pay cheque for their savings and investments.
The pair currently have investments in the stock and crypto markets, bringing their net worth up to $770,000.
By breaking down their after-tax income into the three categories, they get a clear understanding of where their money goes, so they are able to stay within their means to avoid overspending.
Queenie says the 50/30/20 rule has changed their lives because they have been making progress towards a brighter financial future.
“I wish I knew the 50/30/20 rule earlier,” she says.
“I’ve had times when my life was a bit dull and I wasn’t spending enough money on the fun stuff.
“But I’ve also had times in my life when I felt like I wasn’t getting ahead with my financial goals and I should have been contributing more to my savings and my investments.
“Now I feel so much more balanced.”
By breaking down their after-tax income into the three categories, they get a clear understanding of where their money goes. Credit: Invest with Queenie
For those struggling to save money, Queenie has shared her top three budgeting tips to help you get ahead of your finances.
“Have a look at your expenses from the past three months and see if there are any areas you could cut back on,” she suggests.
“Most people look at cutting out their $5 coffees or $10 subscriptions, but the biggest expenses we generally have are housing, transport and food.
“So if we can find a way to reduce those expenses, even a little bit, we could save quite a bit for the most exciting stuff.”
Once you have an idea of how much you roughly spend each month, Queenie suggests automating your savings.
“Set up automatic transfers to a savings account,” she says.
“I also set up automated investments so that every month, 20 per cent of my pay gets invested.”
Finally, Queenie says you should look at ways to increase your income.
“You can only save so much,” she says.
“But by getting a pay rise, or even switching jobs into a higher paying job, you may not even need to cut anything out of your budget at all — and still save more money.”
She referenced a study that found new hires were getting paid up to seven per cent more than existing employees in equivalent roles.
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