The 50-20-30 Money Saving Tip

Experts share money-saving trick to stop you from ever being out of pocket again.

17:11 26 July 2016

If you find yourself being out of pocket from time to time and unable to save for your future or retirement, experts recommend a very simple but highly effective money-saving trick that you can try. The 50-20-30 rule means that you spend 50per cent of your monthly earnings on essentials and 30 percent on things you want while keeping 20per cent as part of your savings.

 

Jamie Smith-Thompson, managing director of Portafina (pensions and ISA advice specialists), said that following this technique religiously could lead to financial success. She said; 'Categorising your income like this is a great way to think about your money, and will also get you into the habit of paying yourself first, which is crucial for financial success. It’s similar to the thrift box system from years ago, so is a tried and tested method. 

 

However, Kris Brewster, Head of Products at Skipton Building Society, believes that there’s no one-size-fits-all techniques in handling finances but agrees that saving a portion of your monthly salary, no matter how small, can help.

 

He said: 'Look at your finances and identify your disposable income. Make a list of your essentials, such as living and transport costs, then do the same for things like going out, shopping or leisure activities. Try to get into the habit of saving a proportion of your income regularly each week or month: it can often be worth putting goals or incentives in place to help you stay motivated in the longer term.

 

'There are always times when you may need to be flexible with your finances – some recent research conducted by Skipton Building Society reveals that one in ten people dip into their savings on a monthly basis. The important thing to keep in mind is that putting money away on a regular basis will pay off in the long run, even if it’s only bit by bit. It’s never too late to make a start.'