Is the 50/30/20 budgeting technique still realistic for savers?

Saving money each month is a rewarding habit, as it helps with unexpected expenses and makes long-term financial goals a reality. 

However, it’s also something that can be easier said than done, especially as we’re still in the middle of a cost of living crisis. 

Rising bills and food costs have put a strain on everyone’s budgets, meaning there is less money to save each month. 

We recently surveyed* people about savings in 2024, and the results reflected the UK’s current financial situation. 

A quarter of consumers are saving less than 5% of their monthly income and on average people are saving 12%. In terms of money, this equates to someone saving on average £234 each month. However, consumers are most likely to save £50-£100 on a monthly basis, with those living in London saving the most each month at around £300. 

Although it’s great that people are still prioritising saving each month, these figures mean it will take longer to build a substantial savings pot. 

Over a half of people have long-term financial goals, but consumers are finding a lack of disposable income and unexpected expenses are holding them back.  

Unfortunately, these results are a far cry from the popular budgeting technique - 50/30/20. 

This rule says you should save 20% of your income, with 30% spent on any wants and 50% used for needs. 

‘Needs’ feature the expenses you have to pay each month; including mortgage or rent, food shop, bills and travel costs. Whereas ‘wants’ cover holidays, non-essential items and going to restaurants or gigs. 

This technique is supposed to help people to keep track of their money by simplifying spending into three categories. It’s also popular as it works well for a variety of incomes and is fairly simple for anyone that hasn’t budgeted before. 

But, with some people struggling to save 5% each month, the 20% might feel unrealistic. 

Expenses might now exceed 50% which puts more pressure on the savings pot and any wants. There is also the burden of debt to address, as many people will still be recovering financially after the pandemic. 

Instead, you could use the 50/30/20 technique as a guide, rather than a rule. 

Try tracking your spending for a month and look for opportunities where you could save money. Then be realistic with how you split your expenses into the three categories.

For example, if you’re currently saving 5% of your income each month, set yourself a target of 10% and work out whether this will be possible by reducing some expenses. This could be cancelling a subscription or swapping a night out for a night in. 

Remember, circumstances can change and you’re in control of your budget, so don’t forget to revisit and adjust the categories to suit your needs. 

The 50/30/20 rule might feel out of reach today, but by adapting the rule to suit your personal situation you could increase monthly savings. 

Then, once you’ve started to build a savings pot, compare savings accounts to find competitive interest rates. 

Top rates on savings accounts are more than 5%, so money can be moved into a high interest account. You’ll then start earning some interest on top of the money you’ve saved, which will help you to feel more financially confident and secure. 

Survey results at a glance 

• On average, consumers save 12% of their monthly income.

• Consumers are most likely to save 5-10% (28%) of their monthly income, followed by less than 5% (25%) or 11-20% (22%).

• On average, consumers say they save £234 each month.

• Consumers are most likely to save £50-100 each month (21%), followed by less than £50 (20%) and then £101-250 each month (18%).

• On average, consumers in Greater London save the most each month, while those in the North East save the least (£307 vs £196).

• Over half (55%) of consumers say they have long-term financial goals.

• The two biggest challenges which consumers face when it comes to saving money are a lack of disposable income (37%) and unexpected expenses (32%.) ​​

*Survey conducted by Censuswide on behalf of money.co.uk - 2,003 respondents from the UK aged 18 and over. This survey was conducted in June 2024.