Redefining the 50 30 20 rule

Conceptualised by Elizabeth Warren in her book ‘All Your Worth: The Ultimate Lifetime Money Plan’, the 50:30:20 is a universally acknowledged financial rule.

Here’s a quick refresher in case you needed one –
50% of your after-tax income should be attributed to your necessities such as rent, electricity, water and phone bills.
30% of your after-tax income should be directed towards things you want like travel, OTT subscription, shopping, dining and other leisure activities.
The remaining 20% should go towards savings, investments, paying off debt (if any!), and your emergency fund.


While globally this guideline is quite readily accepted and followed by most people. However, the guideline needs to be shape-shifted in various forms to adapt to people’s unique living situations in different countries. For example, many young people in India don’t have hardcore expenses like rent or bills if they’re living with their folks. And in some cases, individuals who have low income might need to direct more than 50% of their income to necessities.

We decided to explore a couple of permutations and combinations of the golden 50:30:20 rule to explore this further:


Numerous young Indian millennials are living with their parents whilst drawing a salary. In such cases, a whole lot of necessary expenses are cut down such as rent, utility bills etc. This often allows individuals to contribute a smaller sum to household expenses and save more than 40% of their income. If you fall under this category, a 30:30:40 ratio would be something that works for you.[/vc_column_text]

 30%: Household expenses and essentials

 30%: Wants such as travel, OTT subscriptions, gifts, shopping, home decor, dinner & drinks

 40%: Here is your chance to save/invest more!


Okay, let’s be real, living in some major cities in India can get crazily expensive. And sometimes 50% for your necessities simply does not make the cut. So twisting the 50:30:20 rule, in this case, requires some planning around the lifestyle you want to choose. This particular permutation would require a bit of sacrifice from your end on the fun stuff.

60%: Household expenses and necessities

 20%: Be very picky here and choose stuff that really makes you happy – don’t feel guilty about borrowing your friend’s Netflix password, pre-drinking at home before you go out, and cooking at home more (it’s also healthier!)

20%: Savings, investments, building an emergency fund.


While these are just combinations we have been thinking about, there are several unexplored blends. What is your version of the 50:30:20 rule? Do leave us your comments. Lastly, no matter what guideline you follow, we suggest keeping- ing ~20% of your after-tax income aside for savings and investment for sure.

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