Following 50/30/20 isn't possible in this situation. The average needs of this household exceed 50% of the income by 38%, which reduces the ability for this household to save for the future.
How does this add up?
Totaling the cost of necessities:
Based on a two-bedroom apartment for families with children or a studio apartment for a single adult.Source.
Includes insurance premiums and out-of-pocket expenditures. Source.
The minimum budget, based on the USDA's “low-cost plan” that assumes almost all food is bought at the grocery store and prepared at home. Source.
The cost of a monthly transportation pass in that location for each adult. Car ownership and expenses would be at least $450 a month.
Based on center-based child care and family-based care for four-year-olds and school-age children. Source.
Click to add health care costs Click to add groceries costs Click to add transportation costs Click to add childcare costs Next item
Click to go back to cost of groceries
So now what?
The bottom line
This looks at median household income, which suggests that a growing cost of necessities and lack of savings is the rule rather than the exception. In fact, 46% of Americans could not cover an unexpected expense of $400 and 31% do not have any retirement or pension (source). The 50/30/20 guideline doesn't add-up for most Americans where many people live paycheck to paycheck. There's a growing lack of financial stability and security across the country and different family situations. It's hard to build a nest egg when you can barely afford the nest.
