What are the rules of thumb for budgeting?

In this series, The Balance has assembled more than two dozen rules of thumb relating to budgeting, investing, buying a home, and more. Some are well-known, like the 50/30/20 rule of budgeting, while others are better known to insiders, like the rule for redeeming credit card rewards .

What is the 80/20 rule of thumb?

The remaining 80% is for spending. It's a simplified version of the 50/30/20 rule of thumb, which allocates 50% of your take-home pay to needs, 30% to wants, and 20% to saving. The 80/20 rule of thumb is best for those who don't need or want structure, who don't like to track their spending, or who are new to budgeting.

What are financial rules of thumb?

Rules of thumb are not scientific and do not take into account the individual circumstances and needs of a person, so they may not be applicable to your particular situation. Investors may be familiar with a variety of "financial rules of thumb" that are intended to help individuals learn, remember and apply financial guidelines.

Is budgeting a mindset?

Budgeting is a mindset. If you give yourself parameters to follow and stick within your guidelines, you’ll see a significant improvement in your spending and saving habits, and will be on your way to your financial goals. Start with these rules and adjust them as you need to and are able.