Introduce the concept of the 50/30/20 budgeting rule. This is a budgeting technique that divides your after-tax income into three primary categories: needs, wants, and savings or debts
Explain that according to this rule, 50% of your after-tax income should be spent on needs and obligations that you must-have or must-do. These are the essential expenses such as rent, groceries, utilities, health insurance, car payment, etc
Next, discuss that 30% of your take-home pay should be spent on things that improve your standard of living. These could include entertainment, dining out, gym memberships, hobbies, vacations, and other discretionary expenses
Lastly, the rule suggests that 20% of your income should go towards savings or paying off debts. This part of your income could be used for retirement savings, emergency funds, paying off credit card debt, student loans, etc
Emphasize that the 50/30/20 rule simplifies budgeting by dividing your after-tax income into just these three spending categories. It's a realistic budget that actually works for many people.
Lastly, the rule suggests that 20% of your income should go towards savings or paying off debts. This part of your income could be used for retirement savings, emergency funds, paying off credit card debt, student loans, etc