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Spending your income

How much should you save? What’s an okay amount to spend on your rent or mortgage? Are you eating out too much? 

These are all common – and fair – questions. And the answers will vary depending on your circumstances.

However, you can use some general guidelines to decide if you’re happy with how and where you’re spending your income. Then you can decide if you’d like to make changes.

50-30-20 rule

A useful spending guide is the ’50-30-20’ rule. 

The idea is you’d aim to spend: 

  • 50% of your income on needs: essential living expenses, such as rent/mortgage, bills, food and transport to work
  • 30% on wants: discretionary spending, such as eating out, shopping, trips and subscriptions
  • 20% on saving or debt – paying off debt beyond minimum payments, or putting money into a savings account, investment or pension fund


So if your monthly income was £1,500, you might spend: 

  • £750 on essentials 
  • £450 on wants 
  • £300 on savings or debts


Remember, everyone’s situation is different. If you find your spending doesn’t fit the 50-30-20 model, that’s okay. But, if it’s realistic for you, it could give you a good goal to aim for.

Small changes can make a big difference over time. Putting a bigger portion of your income into savings or paying off debt can help you feel in control and able to make more of your money.

How to apply the rule

Start by looking at how much money you have coming in on a regular basis. If you’re working, this will primarily be your salary. If your income changes from month to month, work out the average over the last 3 months.

Then, looking at your bank statements for the last 3 months, work out your average monthly spend. It can help to categorise your expenses so you can see specific areas where you may be overspending. 

These categories should include your ‘needs’, which are regular outgoings like: 

  • bills 
  • rent or mortgage 
  • groceries 


Plus your ‘wants’, such as: 

  • eating out 
  • shopping 
  • subscriptions


If you’re not happy with where your money’s going, work out if you’re able to change anything to get closer to 50-30-20.

What next?

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