Spending or saving - how to find the right balance?
Budget. Does anyone like that word? How about this instead - the 50/15/5 rule?
It's our simple rule of thumb for saving and spending: aiming to allocate no more than 50% of take-home pay to essential expenses, 15% of pre-tax income to retirement savings, and 5% of take-home pay to short term savings.
Whatever's left over can then be spent as you choose - on leisure, restaurants, holidays, etc.
Consider the Fidelity 50/15/5 rule
(including employer contributions) towards retirement
Short term savings for unplanned expenses
Why 50/15/5? We looked at hundreds of different scenarios to come up with a spending and saving guideline that would help people save enough to retire. Our research suggests that by sticking to this rule, you'll have a good chance of staying on top of things financially now - and maintaining your current lifestyle in retirement.
Now, let's be completely honest. With housing, food and energy costs as high as they are right now, it could well be that the
50/15/56 split isn't realistic for you. Instead, use it as a starting point, adjusting the proportions to suit your own wallet. Or
simply keep it at the back of your mind as a goal to reach in the future.
Download your free budget planner
Our simple budget planner can give you an overview of how and where you're spending your money each month
Feel good about your money
Discover how measure your financial wellness, and some simple steps to improve how you feel about your money.