Photo: elifskies

What is the 20 80 Rule money?

The 80/20 budgeting method is a common budgeting approach. It involves saving 20% of your income and limiting your spending to 80% of your earnings. This technique allows you to put savings first, and it's both flexible and easy.

fool.com - 3 Reasons I Love the 80/20 Budgeting Method - The Motley Fool

How do I ask God for money?

God, I stand in financial need, but your word declares that you are an ever-present help in time of need (Psalm 46:1). I thank you that you are...

Last updated Mar 11, 2018

Are affirmations toxic?

Studies conducted by Joanne Wood, a professor of psychology at the University of Waterloo show that the use of affirmations, or positive self-...

Last updated Oct 23, 2020

Awaken your dormant DNA ability to attract wealth effortlessly

The simple yet scientifically proven Wealth DNA method laid out in the report allows you to effortlessly start attracting the wealth and abundance you deserve.

Learn More »

Promotion

Many or all of the products here are from our partners that pay us a commission. It’s how we make money. But our editorial integrity ensures our experts’ opinions aren’t influenced by compensation. Terms may apply to offers listed on this page.

Is the 80/20 budgeting method right for you too?

Key points

The 80/20 budgeting method is a common budgeting approach.

It involves saving 20% of your income and limiting your spending to 80% of your earnings. This technique allows you to put savings first, and it's both flexible and easy. There are lots of different approaches to budgeting. My favorite, though, is something called the 80/20 budget. With the 80/20 budget, you keep your spending on essentials as well as frivolous expenses to 80% of your income and you save the remaining 20%. This has been the type of budget I've found most effective for me over the long term, and it's a great way to make a spending plan if you really don't enjoy the budgeting process. So, why do I love this approach so much? There are three key reasons.

1. It prioritizes savings

The main purpose of making a budget in the first place is to make sure you are saving plenty of money (and not going into credit card debt or otherwise living beyond your means). After all, when it comes down to it, it doesn't really matter if you spend a little more on housing and a little less on your car or vice versa -- as long as you're putting aside enough money to accomplish financial goals and build wealth. The 80/20 budget really focuses on this underlying purpose of budgeting and that's why it is so great. It puts saving money front and center. The only definite thing you need to do to stick to the 80/20 budget is to save money. So as long as you can follow the requirement to save 20% of your income, you'll have accomplished your most important financial objective.

2. It's simple

What causes the rich to get richer?

Conventional wisdom suggests that richer individuals put more of their assets toward high risk investments, which can result in higher returns. But...

Last updated Jul 12, 2020

How to increase confidence according to astrology?

To boost self-confidence, wake up early in the morning and worship the rising sun. Recite 'Aditya Hriday Srota' on a regular basis. Offering water...

Last updated Dec 27, 2019

Awaken your dormant DNA ability to attract wealth effortlessly

The simple yet scientifically proven Wealth DNA method laid out in the report allows you to effortlessly start attracting the wealth and abundance you deserve.

Learn More »

Promotion

Another big benefit of the 80/20 budget is its simplicity. There's no need to make a list of dozens of different things you spend money on each month when you make this type of budget. And there's no need to try to decide in advance if you're going to spend more on entertainment and less on dining out or clothing or vice versa. As long as you're prioritizing saving first as the budget calls for, and you don't find yourself spending too much and going into debt, you can be financially successful with this budget without a lot of hassle.

3. It's flexible

Flexibility is another huge benefit of an 80/20 budget. If you have a budget where you have set specific spending limits for every different type of expenditure, then you can find yourself in trouble when things don't go as planned. If you budgeted a certain amount for groceries and then inflation sends prices at the store skyrocketing, you'd have to rework your entire budget. But with an 80/20 budget, you can just spend what you need on groceries and stop spending on other non-essentials that month once you've reached your 80% spending limit. Now, this budget won't work for everyone because some people end up overspending if they don't have detailed limits for where their money should go. But if you set up an automated transfer to savings for 20% of your income and can live on the rest of what's left over without finding yourself short of cash and having to borrow, then there is no reason to get any more detailed with your budgeting process.

fool.com - 3 Reasons I Love the 80/20 Budgeting Method - The Motley Fool

What not to do while manifesting?

4 Common manifesting mistakes Expecting instant results. Lacking clarity in what you want. Remaining rigid in your desired outcome and pathway to...

Last updated Mar 15, 2022

Who can bless oil?

When a priest has no blessed oil and a grave need occurs, Canon 999 provides him with a solution so that nobody might be deprived of the grace of...

Last updated Mar 5, 2022

Promotion

How to become rich quickly?

6 Steps to Become a Millionaire by 30 Start Saving Early. The easiest way to build your savings is to start early. ... Avoid Unnecessary Spending...

Last updated Jun 15, 2020

Awaken your dormant DNA ability to attract wealth effortlessly

The simple yet scientifically proven Wealth DNA method laid out in the report allows you to effortlessly start attracting the wealth and abundance you deserve.

Learn More »

Promotion

At what age do most people get rich?

Data collected by Betway Insider has revealed the average age to become a millionaire is only 37. Becoming a first time billionaire takes a bit...

Last updated Jun 22, 2021