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So minimum payments on your car loan, credit cards, student loans, etc. This rule of thumb says that those expenses should comprise no more than 50% of your take-home pay.

So today, we’re going to walk through this form of budgeting and talk about its pros and cons.to Our Podcast on This Budget Type: At its basic level, the 50-20-30 budget divides your after-tax, take-home pay into three buckets.It also includes minimum payments you need to make on your debts.Without making them, you can suffer some serious consequences!My attitude was that my job was going to finance our living expenses until we retired at age 65. I’d go to work for 40 to 50 hours a week, earn income, save a little, and spend the rest. ) With that mindset, I did what a lot of people do. But after a while, I started thinking about how much my money was working for me.

I bought a new car, the expansive cable TV package, and the big TV. We took expensive family vacations and other things that most middle-class Americans do. But that all started to change when I started this blog and began to write extensively about personal finance. But as I blogged about personal finance, I started to save a little more money, pay off more debt, and watch my retirement nest egg grow. It was almost like sending out employees who were working for me.The first 50% of your budget goes towards necessities, including shelter, food, utilities, transportation, clothing.These are the things you need to get by day to day.I’ve seen many financial experts write about it, as well.The bottom line is that the 50-20-30 budget has some advantages as a starting point, but, like most financial rules of thumb, it can also lead you astray.Before I started blogging about personal finance in 2007, I thought about money like most people do.