Why most people don't need a complicated budget
Many people abandon budgeting because they start with complex spreadsheets and dozens of categories. In reality, one simple rule is enough to control your finances — the 50/30/20 rule. This formula was popularized by Senator Elizabeth Warren in her book 'All Your Worth.' The idea: split your after-tax income into three parts, and you'll automatically live within your means.
How the rule works
Divide your monthly after-tax income into three categories:
- 50% — needs. Rent or mortgage, utilities, groceries, transportation, insurance, minimum debt payments. Everything you can't live without.
- 30% — wants. Restaurants, entertainment, subscriptions, non-essential clothing, hobbies, travel. Everything that makes life enjoyable but isn't strictly necessary.
- 20% — savings and debt. Emergency fund, investments, retirement savings, extra debt payments. Money that works for your future.
When to adapt the rule
The 50/30/20 split is a guideline, not a rigid law. If you live in an expensive city and rent takes 40% of your income, your ratios might shift to 60/20/20 or even 70/20/10. If you have a high income and low fixed costs, increase savings to 30-40%. The key is the principle itself: necessities first, then enjoyment, and always save something.
How to track 50/30/20 in Coinka
Create three budgets in Coinka: 'Needs' at 50% of your income, 'Wants' at 30%, and 'Savings' at 20%. Assign the relevant spending categories to each. The app automatically shows progress bars and warns you when you're approaching a limit. After a couple of months, you'll know your real spending ratios and can adjust them.
The perfect budget isn't one that tracks every penny — it's one you actually stick to.