happy new year!
We're now in a new year, so that doesn't mean you automatically start over with the calendar. Our finances are exactly where we left them. The same applies to everything in our lives.
The new year comes with a lot of expectations and commitments. I understand that our personal finances are probably not balanced yet, for you it may be all over the place too.
So, if you've ever run out of money before the month is due, you're not alone. For many of us in our different households, income comes in, bills take it out. It's not always a problem of earnings; Often, it's a structure problem.
Our finances need balance to function, which is where the 50/30/20 rule comes in. It doesn't promise instant riches or ignore the realities of rising costs. What it provides is direction, exactly what you and I need to swim in the deep waters of uncertainty this year. The rule simply says: divide your take-home income so that 50% is spent on needs, 30% on wants, and 20% on savings or loan repayment. I know it sounds simple on paper, together we make it practical and translate into real life.
50% for requirements: non-negotiable
Necessities are expenses that you cannot avoid. For you, this may include rent, food, transportation, utilities, school fees, essential health care, and minimum loan payments. In our various homes, this category often feels overwhelming – and with good reason.
For example, if your monthly take home income is ₦200,000, approximately ₦100,000 should cover these basics. This could mean ₦40,000 for rent, ₦25,000 for food, ₦15,000 for transportation, ₦10,000 for utilities, and ₦10,000 for school or medical costs.
This is the area you will need to make sure your fabric is properly cut for the amount of material you have. You cannot earn ₦200,000 and pay ₦2 million rent on the island. This is not considered wise. Find something that matches the content you have. ₦40,000 monthly for 12 months would mean ₦480,000, get something close to this figure so as not to be left without money after paying the rent.
If your essentials are more than 50%, the rule isn't broken – it just needs adjustment. High rents, rising food prices and transportation costs are realities. What matters is knowing your numbers and making conscious trade-offs, not pretending the expense doesn't exist.
30% for wants: pleasure with limits
Desires are what make life enjoyable, but they are not necessary for survival. These include social outings, data subscriptions, clothes, PS5, eating out, salon visits and impulse purchases.
Using the same ₦200,000 example, ₦60,000 falls into this category. This is where the celebrations, celebrations, celebrations, birthdays and dainties of December are spent.
The problem isn't pleasure – it's unplanned pleasure. When there's no budget for fun, it gets spent on rent money and savings. When it has its limits, you can enjoy life without financial regrets.
20% to Savings and Loan: Pay for Your Future Yourself
This is the most neglected part of many of our budgets – and also the most important. Savings and loan repayment include emergency funds, investments, retirement planning, education funds and paying off high-interest loans.
From ₦200,000, ₦40,000 goes here. Even if you can't start with the full 20%, start somewhere. Consistency matters more than size.
Automating savings helps. When money leaves your account before you even see it, the spending becomes intentional rather than emotional.
implementing the rule in nigeria
The key to using the 50/30/20 rule in our country is flexibility:
Budget with net income, not gross salaries.
For freelancers and business owners, use the average of the last 3-6 months as your baseline.
Separate accounts or wallets help reduce temptation.
Plan for family obligations – weddings, contributions, donations, tithes, offerings – these are no surprises.
Prioritize paying off high-interest debt while maintaining a small emergency buffer.
If your needs exceed 50%, consider a temporary 60/20/20 split. If debt is a priority, a 50/20/30 approach may work. This rule is a guide, not a punishment.
Your money should work for you – it shouldn't surprise you at the end of the month.
