Managing money can feel complicated, especially in India, where expenses like rent, EMIs, groceries, and taxes keep increasing. But there’s a simple formula that works for almost everyone: the 50-30-20 rule.
It’s easy to remember, easy to follow, and helps you balance spending and saving without feeling deprived.
The rule divides your monthly take-home income into three parts:
- 50% – Needs
Essentials you can’t live without:- Rent or home loan EMIs
- Utilities (electricity, water, internet)
- Groceries and household expenses
- Education fees
- Health insurance premiums
- 30% – Wants
Things that improve your lifestyle but are not essential:- Eating out
- Travel & leisure
- Shopping for clothes, gadgets
- Subscriptions (OTT, apps, memberships)
- 20% – Savings & Investments
Money you set aside to secure your future:- Emergency fund
- SIPs in mutual funds
- PPF, EPF, NPS
- Short-term investments for goals
How It Works for an Indian Salaried Professional
Let’s say your monthly take-home salary is ₹60,000:
- Needs (50%) → ₹30,000
Rent, groceries, EMIs, and bills - Wants (30%) → ₹18,000
Eating out, entertainment, shopping - Savings (20%) → ₹12,000
SIPs, PPF, emergency fund
Tip: If you live in a metro city where rent is higher, your “needs” may go up to 55%, but try never to reduce savings below 20%.
Why This Rule Works
- Simple: Easy to remember and apply
- Flexible: Adjust percentages slightly based on your lifestyle
- Encourages consistent saving
- Balances enjoyment vs financial security
Many Indians struggle because they spend first and save whatever is left. This method flips that: save first, then spend wisely.
How to Implement the 50-30-20 Rule in India
- Track your monthly expenses
Use apps like Walnut, MoneyView, or INDmoney - Automate your savings
Set up SIPs or recurring transfers to your savings account as soon as salary is credited - Adjust your lifestyle gradually
You don’t need perfection. Start with approximate percentages and refine each month - Review every 3–6 months
Rebalance your allocations if income changes or expenses increase
Common Mistakes to Avoid
- Spending the “wants” portion impulsively
- Ignoring emergency funds
- Waiting to start savings only after earning more
- Overcomplicating the budgeting process
Final Thoughts
The 50-30-20 rule is not a strict law — it’s a guideline. For Indian salaried professionals, it helps control spending, build savings, and invest consistently, while still allowing you to enjoy life.
Start today, track your progress, and watch your finances improve steadily.
Disclaimer: This article is for educational purposes only. It is not financial advice. Consult a certified financial advisor before making investment decisions.
