Making The 50/20/30 Rule Work For You.

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So many people especially young people have a huge problem allocating their income between their wants, needs, savings, investments and the likes. Managing your income and being financially accountable is extremely important and one of the keys to financial success.

In achieving this, we suggest the adoption of the 50/20/30 rule. Yeah, it kind of sounds funny…. but keep reading and you will find it amazingly insightful.

The 50/20/30 budget rule was popularized by Senator Elizabeth Warren in her book All Your Worth: The Ultimate Lifetime Money Plan. In a nutshell, this budget rule helps you allocate your resources (after tax) into 50/20/30. Below, I explain what exactly you should consider allocating to the different areas of your life.


These are the “MUST HAVES” which include rent, food, utilities (water, light etc.), healthcare and the likes. These are items that are essential to your wellbeing and not cold stone ice cream or Netflix and DSTV subscription.

Your Needs should be allocated 50% of your income after tax. If you find that you are spending more than 50% on your needs then you have to find a way of adjusting your lifestyle to fit it. Perhaps, cooking at home more often than eating out, taking regular public transport rather than ordering Uber or Bolt all the time.


Items that fall under the wants category are items you can do away with but makes life comfortable and entertaining. Things like eating out, vacations, expensive gadgets, cinema and general outing are all wants as they don’t particularly ensure your survival but rather fall into the comfort and entertainment bucket.

Your wants should be allocated a maximum of 30% of your net income.


Savings are extremely important to our financial success not just because it instils discipline but because it also serves as a buffer or cushion in time of needs for unforeseen and emergency expenses. There are different reasons why people save, from saving for a project (house, wedding, child birth, travel etc.), to saving for a rainy day (emergency fund), to saving for festive periods (Christmas, Eid Kabir, Eid-Fitr and even Easter). For which you can use savings platform such as to help you achieve your savings goal, while also earning up to 10% per annum.

The other cool thing about saving money especially with a financial institutions (Bank or Fintech) is that you are paid interest on the money, so your savings grows, and the magic of compound interest takes effect. If you don’t know about the Magic of compound interest, we will be covering this in another article.

It is recommended you allocate at least 20% of your income to your savings even before splitting between your needs and your wants.

Now try out this rule and see how well your personal finance life will improve. We also welcome any comments from people who have perhaps tried this rule and their experience or you have any questions.

About Festivesave

Festivesave is Nigeria’s first digital savings platform specifically for festive celebrations (Christmas, Eid Kabir, Easter and Eid Fitr). The platform was created with the mission to take the stress out of festive celebrations by encouraging people to save enough funds to meet the additional expense of the festive season.