Why the 50/30/20 Budget Doesn't Work and What To Do Instead

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Personal Finance with Leila - Debt Over It

Күн бұрын

Пікірлер: 59

@haileyreign 6 ай бұрын

I wasn't ready for "The BMI of Finance" 😂😂😂

@PersonalFinancewithLeila 6 ай бұрын

😂 every time I go to the gyno, she tells me my BMI and I'm considered overweight because I'm short but muscular! Like why are we still using that number??

@haileyreign 6 ай бұрын

@@PersonalFinancewithLeila I wish we had body composition measurements instead. BMI can be a starting point but it's not the whole picture. Having 100 lbs of muscle and 100 lbs of fat are two VERY different things with various health implications.

@angiewolf8189 6 ай бұрын

Moral of the story...debt is horrible. When one has debt, their money is not theirs. While I get debt is the culture, one can choose to not go down that path. The debt and things culture in our society has got to change. It's okay to be different and not have debt.

@PersonalFinancewithLeila 6 ай бұрын

Definitely!

@thehomeless_trucker 6 ай бұрын

I never did like the 50/30/20 rule... big thing for me is that it allows you to blow more than you save.

@PersonalFinancewithLeila 6 ай бұрын

Right?! I always thought the 30 and 20 should at least be switched!!

@KittyKat-vb1nd Ай бұрын

It's a template. You customize based on your expenses. It's not written in stone.

@thehomeless_trucker Ай бұрын

@@KittyKat-vb1nd But when you have to change every single number in the template, is it even a good template? It's built on a flawed logic of spending 50% more than what you spend on debt paydown and savings on discretionary spending. If my numbers were 30/20/50, I don't see how I could claim I was using the 50/30/20 template.

@josephjustice4553 14 күн бұрын

There’s this thing called “self control.” If you use it, the 50/20/30 works just fine!

@lowkeyy.yeuris Ай бұрын

This video is so underrated and I love that you're tackling this and being realistic. When I started learning about personal finance I kept being told to use this rule and it felt right because it helps set a rule on how to split your money, at the same time we do have to recognize that not everyone is working a full-time, well paying, 9-5 job where they can afford to save 20% of their income.

@SOLTANA17 6 ай бұрын

More like 50% rent 30% groceries 20% on everything else 😂

@PersonalFinancewithLeila 6 ай бұрын

😂 right?!

@gretelwhite8088 6 ай бұрын

Writing a reality based budget is the most important thing, it forces you to face your situation and offers options to save. You just can't argue with the facts!

@PersonalFinancewithLeila 6 ай бұрын

For sure!!

@ecouch12 6 ай бұрын

I think 50/30/20 is a good starting place for someone new to personal finance to set some guard rails. However I think it only works for someone with little to no debt. So after going through a debt free journey, 50/30/20 can be a good next step

@PersonalFinancewithLeila 6 ай бұрын

Agreed!

@TheSolver-PR 6 ай бұрын

Good one! Hopefully many young ones are exoosed to your content. Tha KEY is, soundly structure your life a soon as possible and make the right choices (no stupid purchases, mate selection for family, steady income progress, etc.).

@PersonalFinancewithLeila 6 ай бұрын

Thanks so much! And yes I agree!

@TheHallowsWitch 6 ай бұрын

50/30/20 would never work for me because I work a part time low income job. I also currently have no option of changing jobs due to the rapidly changing visual dissability my partner has and the support my employer offers me around that. But I would love to maybe one day get it all down to 70/20/10 (10 being wants), we are currently working on saving goals to get us further in life and for instance growing our own herb garden with plants we got from family. Even small steps are progress! 😄

@lindadorman2869 6 ай бұрын

I think you have to take into consideration age as well. A lot of models assume older people have retirement funds, investments or property but this is not true. Many of us are starting, or starting over, and have a much shorter growth timeline. I'm 63, debt-free with no assets and follow a 30/10/60 model. From my monthly net income derived from Social Security, pension and small business revenue, I bring in $6000/month...$1800 goes towards needs, $600 towards wants and $3600 into high yield savings.

@PersonalFinancewithLeila 6 ай бұрын

Definitely!! You have a great balance!!

@therealtaydev 6 ай бұрын

Thank you, Leila! 50/30/20 doesn’t work if you have a lot of debt or low income. When you are on low income everything is by the dollar, not percentage. Many of these gurus only speak to high income earners anyway.

@juliequick5526 6 ай бұрын

A good topic to think about. I am following a budget for expenses and savings and then the remainder is used as we want. I am a lot older though and have had to track each penny in the past. The only must for me is to have a budget whatever it looks like! Excellent content, as always x

@rolandosouffrain7957 6 ай бұрын

Most people love to spend and not save. I love to save and spend. Lol😂😂❤❤ lucky me I live below my means and can save a lot. I have a goal of maxing out my Roth 401k and Roth IRA. I am on track so far.🎉

@slwdro 6 ай бұрын

When Leila says "Personal Finance is Personal Finance" she means it. The 50/30/20 would not have worked for me when I started this process. That's the main reason why I started following and implementing her style. I made excellent progress from Sep_23 to end of 2023. I still needed assistance which lead me to having 1:1 coaching sessions from Jan 2024 which I highly recommend. I have tackled some much debt with her recommends and on path of being debt free with 14-20 months from now. If you on the fence on investing in 1:1 coaching, Please do it for the following reasons: It's holds you accountable , it's motivating seeing the results and Leila with easy to work with.

@PersonalFinancewithLeila 6 ай бұрын

Thank you so much Dro!! 🙌🏻❤️

@sinnamonstory 6 ай бұрын

Leila this video has solidified you as my favorite finance creator! Thank you for being thoughtful about these common financial rules that everyone just spreads around that might not really make sense in certain situations. I was just thinking about making a video about how 50/30/20 does not work esp for people who are high earners or low earners. For high earners, you can spend in many cases less than 50% on your needs and shouldn't scale up your fixed costs like housing and groceries just because you can. For low earners, you may not be able to spend less than 50% on your needs because there's a floor to the cheapest housing and food options around you. It makes me so sad that some people end up beating themselves up trying to achieve something that may be impossible for their circumstances.

@PersonalFinancewithLeila 6 ай бұрын

Thank you so much!! And yes, everyone's situation is different!

@JaniVMD 6 ай бұрын

Not sure if you have listened to Ramit Sethi but I love his philosophy for personal finance and I have started to make some changes and I am considering getting his book.

@PersonalFinancewithLeila 6 ай бұрын

I have! I don't watch/listen to him much, but yeah his approach to finances is very interesting!

@lavayuki 4 ай бұрын

My necessities are more than 50%… my rent and car park charges are already 50%, and then bills on top.

@robryan9675 3 ай бұрын

What are your credentials?? Field of study, certifications, degrees???

@katresealexander1311 6 ай бұрын

Great content as usual. I love your channel. I have my daughters learning and watching as well. Thanks for all that you do.

@PersonalFinancewithLeila 6 ай бұрын

Thank you so much!!

@libbysworld7649 6 ай бұрын

Preach girl, PREACH!

@epfrostwraith 5 ай бұрын

Savings includes debt repayment. Also, the idea of the 50/30/20 rule is that it scales based on your earnings. A person with double the income can have a nicer and more expensive house.

@dragonsworder 5 ай бұрын

Debt repayment is not saving. Saving mean setting money aside for future need. I.e. if you lose your job, you can consume your saving to keep paying the mortage.

@epfrostwraith 5 ай бұрын

@@dragonsworder agreed, but that's how they categorize it in the 50/30/20 rule. It works if you consider that you've just switched to 50/30/20 and you have a bunch of debt to repay. Debt repayment is a better bang for buck than savings (investment) if your debt APR is 7% or higher. Debt repayment from debt that you incur AFTER starting the 50/30/20 should be excluded, of course. Otherwise you're incentivized to keep piling up on debt.

@josephjustice4553 14 күн бұрын

It does in fact work just fine is you have self control.

@lauraburleson4783 6 ай бұрын

Great video as always. Do you have a video on the different ways to invest your money when you have no debt? Maybe even how much you should set aside in a hysa and how much to invest. Thanks 😊

@PersonalFinancewithLeila 6 ай бұрын

I can talk on this!

@chrismitchell6478 6 ай бұрын

50/30/20 is goal numbers, to live comfortably. Saying it doesn't work because people way over spent and are now paying for it and feeling overwhelmed, so it doesn't work, doesn't make sense.

@PersonalFinancewithLeila 6 ай бұрын

Lol did you watch the video??

@chrismitchell6478 6 ай бұрын

@@PersonalFinancewithLeila Watching it again, "the first 3 I opened it wouldn't apply to" of course it wouldn't apply to them, they aren't winning with money. It's like showing up to a race with 4 flat tires, you aren't at the point in the race where you need to worry about shaving seconds off your time, you are stuck in the pit swapping out your tires.

@michaelbourke8967 3 ай бұрын

As to that @SOLTANA17 point I think people in that bracket would be much better examples of which there are probably enough to prove your point. I agree with your perspective and think "The BMI of Finance" analogy is spot on. However, your examples aren't the best imo. I'm sympathetic to those who, due to location or commitments, spend over 35%+ of their income on housing, making the 50/30/20 rule unrealistic. So, you're right that this guideline has more exceptions than it works for hence you bmi remark is spot on. I’m genuinely curious about the second example. They mention spending $500 a month on pets-do they own a zoo, a horse that needs stabling, or a pet that insists on gourmet meals? Surely this is just a one-time thing due to an unexpected vet bill and not a regular monthly expense. If it is every month, it might be time to reconsider having that pet, and I say this as someone who loves animals. They’re spending as much on their pets as they do on their own food, including eating out. That’s hard to justify imo.

@ScrubsandSavings21 6 ай бұрын

I love the editing on this video!!!

@PersonalFinancewithLeila 6 ай бұрын

Thank you!

@lilkieahmassaline721 Ай бұрын

It doesn’t work because those people are living way above their means $5000 total between two people and they have kids. That’s not sustainable for their income.

@zo_471 6 ай бұрын

Just follow Ramit Sethi’s conscious spending plan

@MidlifeMoneyMoves 6 ай бұрын

This is what makes you stand out in this personal finance KZbin world! Everyone’s situation is different and it’s so easy to look at these “rules,” realize they won’t work for your situation, and then just not even bother to try. It takes time and flexibility to get our finances in check!

@PersonalFinancewithLeila 6 ай бұрын

Definitely!! ❤️