The 50/30/20 Rule: A Simple Budgeting Trick Every Parent Should Know📝

Let’s be honest: managing a family budget can sometimes feel like juggling flaming bowling pins while trying to cook dinner. Between groceries, school fees, Netflix, unexpected dentist visits, and the “Mum, can I have this?” requests… it adds up fast.

That’s where the 50/30/20 budgeting rule comes in. It’s a simple, no-fuss way to break down your money so you know where it’s going – without needing a degree in finance or a million spreadsheets.

So, what is the 50/30/20 rule?

It’s a method that splits your after-tax income into three clear categories:

• 50% for needs

• 30% for wants

• 20% for savings and debt repayment

Let’s break that down.

💡 50% for Needs

These are the non-negotiables. The must-pays. The “we can’t live without this” stuff.
Think:

• Rent or mortgage

• Power and water bills

• Groceries (the basics – not the chocolate biscuits… sorry)

• Petrol or public transport

• Childcare or school expenses

• Minimum loan repayments

🧮 Example: If your household brings in $6,000 a month after tax, 50% is $3,000. That $3,000 goes towards keeping the family going.

💡 30% for Wants

This is where life gets a little fun – and also a little blurry.
Wants are not essential to survival, but they do make life more enjoyable.

Think:

• Family takeaways or dinners out

• Streaming subscriptions

• Hobbies and activities (like footy, dance classes, or the new Lego set)

• Holidays

• New clothes (as in, not replacing school shoes that have holes – that’s a need)

🧮 Using our $6,000 example, 30% gives you $1,800 for these extras. And yes, it can include treats – as long as they fit within that 30%.

💡 20% for Savings and Debt Repayment

This category is all about future you. It’s where you build your buffer, pay off debts faster, and plan for bigger goals.

Think:

• Emergency fund

• Extra debt repayments (like credit cards or personal loans)

• Saving for a home deposit

• Investing

• KiwiSaver top-ups

🧮 That leaves $1,200 a month to chip away at your financial goals. Doesn’t sound like much? Over a year, that’s $14,400. Small steps, big results.

But what if my needs are more than 50%?

That’s super common – especially with rising living costs. If your rent or childcare eats up a big chunk of your income, your “needs” might be more like 60 or 70%. And that’s okay.

The point of the 50/30/20 rule isn’t perfection. It’s awareness. Once you know where your money’s going, you can start making small changes – maybe trimming some “wants” or shopping around for cheaper insurance – to bring things closer to balance over time.

Real-World Family Example

Let’s meet the Johnsons – a family of four living in Hamilton. Their monthly income after tax is $7,000.
Here’s what their budget might look like using the 50/30/20 rule:

Needs (50% = $3,500)

• Rent: $2,200

• Utilities: $300

• Groceries: $850

• Petrol: $150

Wants (30% = $2,100)

• Eating out: $300

• Netflix/Spotify/Disney+: $50

• Dance + soccer fees: $200

• Family holiday savings: $200

• “Nice-to-have” stuff: $1,350

Savings & Debt (20% = $1,400)

• Emergency fund: $300

• Extra mortgage repayment: $600

• KiwiSaver top-up: $500

It’s not about being perfect – it’s about being intentional.

3 Actionable Tips to Get Started

1. Track your spending for one month.
Grab a notebook, app, or spreadsheet. See where your money actually goes. You might be surprised! It’s hard to change what you don’t measure.

2. Set a “wants” spending limit.
Decide as a family what’s most important. Let the kids help pick one or two “fun” expenses each month so it feels like a team effort.

3. Automate your savings.
Set up a transfer to a separate savings account right after payday. That way, the 20% disappears before you get a chance to spend it on another trip to Kmart.

Final Word

The 50/30/20 rule isn’t a magic fix, but it is a brilliant way to feel more in control of your money. Especially when you’ve got little humans depending on you.

It’s like giving your money a job – so you’re not left wondering where it all went by the end of the month.

And remember: budgets aren’t about restriction. They’re about freedom. The freedom to plan ahead, the freedom to stop stressing, and the freedom to say “yes” to the things that truly matter. 💛