Is the 50/30/20 rule really a win for everyone or just a trap for people in expensive cities?

Last month in Austin, I tried following that popular 50/30/20 budget where you put half on needs, 30% on wants, and 20% to savings, but my rent alone ate up 45% of my income. My friend in rural Ohio swears by it and says it saved her $6,000 in a year, but she pays $800 for a two-bedroom while I pay $1,600 for a studio. Do you folks think the rule works better for some areas than others, or is it more about tweaking the percentages to fit your actual situation?

2 comments

2 Comments

harris.emma7d ago

My friend in SF literally pays $2,400 for a closet with a window and the 50/30/20 rule would tell her to just stop buying avocado toast like that's gonna fix a 60% rent ratio lmao. The rule is hilarious when your "needs" category is basically just a landlord's retirement fund. I think the people who push it hard are usually living in places where $800 gets you a backyard and a garage, not a studio with a mini fridge that doubles as a nightstand. You're not failing the budget, the budget just wasn't designed for cities where a studio costs more than someone's whole mortgage in Ohio.

nancy_miller7d ago

$2,400 for a closet with a window... I literally had to put my phone down for a second. That's more than my entire monthly paycheck was when I first started working. I don't see how anyone could follow the 50/30/20 rule in a place like that. The budget seems to assume your needs won't cost more than your wants combined, which just doesn't work when rent alone is already over half your income.