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  • Te Kahukura Boynton

50 / 30 / 20 Rule - A breakdown and why this may not work for you:

If you're new to the finance world, you probably haven't heard of the 50 / 30 / 20 rule.


The 50 / 30 / 20 rule was crafted to allow every day people to organize their income in a way that will support their financial future, and promote living below their means.


What is the 50 / 30 / 20 Rule?


This rule states that you should:

  • Spend 50% of your income on needs.

  • 30% on wants

  • 20% on savings / investments



This rule is a fantastic start to families or people with many responsibilities. It allows a chance to analyze where your money is going, and how to improve things. However, I believe that to any rule there are some limitations:


  1. If you have less responsibilities (eg. no children, no mortgage) then you could potentially be saving or investing more.

  2. I don't think that savings and investing should be in the same category (I'll explain shortly).

  3. This rule just isn't applicable or realistic for many families who are earning minimum wage with children to feed.


I'll explain these below.


If you have less responsibilities (eg. no children, no mortgage) then you could potentially be saving or investing more:


I always like the idea of "living like a broke uni student" even after graduating. This is definitely what I plan on doing, and am actually living the life more broke than many of my peers. Some students have an income of $400 - $500 per week, which with no responsibilities and many of us on scholarships for accommodation - is a lot of money!


The problem with this is that most uni students are not educated about finance and so are spending the total of that money that they earn.


In circumstances like this I believe that it is a lot more reasonable to be saving at rates of around 30% - 50%.


I don't think that savings and investing should be in the same category:


Savings and Investing are 2 different categories. Savings should include:

  • Rainy day savings

  • Saving for something specific - holidays, house deposit

  • Emergency Fund

  • 3-6 Months of Expenses

Whereas, investing allows you to grow an income for the future, or to grow money for tomorrow. Examples of investing are:

  • Investment property

  • ETF's

  • Managed Funds

  • Bitcoin

  • Gold

  • Collectibles

This rule just isn't applicable or realistic for many families who are earning minimum wage with children to feed:


New Zealand is living with many social issues at the moment. Housing issues, Health resourcing and an ever increasing academic crisis. The cost of living is increasing at rates far higher than minimum wage is keeping up with. So, it can feel near impossible to be putting any money away, let alone investing money! So, situations like this are when we need to use some of our Maori ingenuity, creativity, and begin to create plans that do not fit in the usual mold.


Most of the time amongst whanau who are earning minimum wage already have their expenses low... So, expenses may not be the problem here. What could be the problem is income.


Increasing your income can be daunting. Here are some ideas to consider:


  • Could a career change be possible? One that earns more money?

  • Is a side hustle possible? Could you mow a few lawns each weekend to generate some extra income?

  • Do you have a skill that you are good at? Are you an awesome chef, great at cleaning, writing, baking?

  • Do you have a spare room in your house that you could rent out?

  • Could you rent your garage out as storage for someone?

  • Do you have a lot of items around the house that you could sell?


'Maori Millionaire' understands that wealth accumulation is not as linear as it appears to be through mainstream media. Many whanau are dealing with social issues that impact them in ways that are not advertised in most finance blogs. I want to create a new scene for us to talk about the issues that we are facing and work on creating solutions to help more whanau make the most of the situation that we are in.


We can't control the institutional racism in our system, the ever growing housing crisis, or the inequities in income for Maori vs Non-Maori or for Women vs Men. But, we can work on one thing:


  • Our self

  • Our Whanau



Comment below your favorite way to make money!


Hei kona ra,


Te Kahukura <3




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