Does the 50/30/20 rule apply to everyone

Minime2.5

I'm a single man in my late 30s. Been very bad with money down through out the years. I've a very good job but don't have much savings. I suppose because I've no dependents I haven't been under pressure to save more. I treat my earnings like pocket money and go on lots of holidays and meals out . I've decided to cop onto myself because there's no reason to still be able to enjoy myself and still save more if I'm smarter . Here is a break down of my monthly bills so woukd appreciate some guidence

1. Rent 580
2. Phone 5
3. Tv channels and internet 60
4. Petrol 50
5. Car tax 35
6. Car insurance 140
7.lotto 48

I haven't listed food or entertainment because there isnt a fixed cost there and that's where the problem lies

I owe the boi 1000 euro

My take home pay is 3500 to 4000k a month

CIP4

Based on the above your outgoings are 918 euro. So even say 3500 for pay that is a big gap between your earnings and outgoings. With any kind of effort I can't see why you wouldn't be able to save 1500 euro a month leaving at minimum 1082 euro for food and entertainment every month which I think is reasonable enough.

Best thing to do is set up a regular savings account and standing order to it for within a few days of you being paid. In other words your savings come out of your current account quickly and as far as you should be concerned that money is gone live off what's left.

If you are saving no money at all at the moment 1500 might be a bit ambitious straight away you could start at 500 and build it up. Important thing is don't leave it to the end of the month and think whatever is left in my current A/C I will put in savings as there will never be anything left. Pay yourself first as the saying goes.

Also try get rid of the loan ASAP as its small and you are just needlessly paying interest on it.

dennyk

I haven't listed food or entertainment because there isnt a fixed cost there and that's where the problem lies

That's really where you need to start. Your "needs" add up to less than a grand a month; if you're bringing home €3500-€4000 and not saving anything, then you have a massive amount of extra expenditures to account for. Sit down and go through *all* of your spending for the last three months, divide it up into categories (groceries, meals out, entertainment, hobbies, travel, etc.) and work out what you're currently spending on each one per month on average, then based on that, look for where you can reasonably cut back.

Once you've figured that out, make yourself a strict monthly budget covering all of those discretionary categories and stick to it every month. Blew all your "entertainment" budget by the second week? No more nights out at the pub for the rest of the month. Spent all your "eating out" money already? You're eating PB&Js at your desk for a while.

You should also set up a monthly automatic transfer to a savings account somewhere. How much you want to save each month really depends on the budget you come up with, but I'd shoot for 10% of your take-home pay at a bare minimum, and 20% would be better. Don't worry about the interest rate, they're all ****e at the moment anyway and with as little as you'll have it won't make a difference right now. As this will be your emergency fund you're starting on, get an account that you can withdraw from on demand if necessary (but don't ever actually do it unless you have absolutely no other choice; this is for true emergencies like "I lost my job" or "My car broke down and needs an expensive repair or else I can't get to work", not "emergencies" like "I really want to take a trip to X this month!" or "I need a fancy new smartphone right now!"). Schedule those funds to transfer a few days after you receive your pay deposit each month, so that you aren't tempted to spend that money before it goes into your savings.

Also, do you have any sort of pension set up? At your age, if you don't, you're already well behind on your retirement savings and need to start playing catch-up ASAP. Talk to your employer to see what they offer; they should either have an occupational pension or a PRSA of some kind. Always contribute at least the minimum amount to max out any matching funds your employer offers, but if you haven't been contributing to a pension at all, you will really need to start contributing a hefty amount, preferably at least 20% of your pre-tax salary in total in order to max out your pension contribution tax relief (and make sure to bump that up to at least 25% as soon as you hit the big 4-0). Depending on your retirement plans, you may need to contribute even more than the percentage eligible for tax relief; I'd suggest trying out some pension calculators to see what they suggest.

Also, get that BoI loan paid off ASAP; you're just wasting money on interest charges. With as much discretionary income as you're bringing in, you should be able to get it paid off in a month or two easily enough once you start cutting back on your uncontrolled expenses.

And finally...the lotto is not a "need" or a "monthly bill", it's just throwing money away. Spending €50 a month on it is a waste, so cut that out for sure.

dellas1979

A bank will want to see 6 months of regular savings.

So say your salary before tax is e65k, a bank will typically lend you 3.5 times that. So say e225,000.

Late 30s - mortgage till youre 65. So again for e.g., mortgage over 27 years + life assurance = e800 (just for arguments sake), you need to save a stress test amount and show the bank you can pay e800 + 300 more (in case interest rates rise) for 6 months + before applying for a mortgage.

Also, that 1k you owe is a little silly (as you are paying interest I assume on the loan).

Never the less, am very curious what all that cash is spent on (am a saver and live a nice life style/travel/eat out most days).