A simple budgeting rule can help, but your best percentage depends on your bills and goals.

If you are trying to figure out how much to save each month, a rule of thumb can be reassuring. Universal Finance recommends the 50 30 20 rule as a starting point. That means 50 percent for essentials, 30 percent for discretionary spending, and 20 percent for saving or investing.

The 50 30 20 rule in plain English

The idea is to split your take home pay into three buckets.

Essentials at 50 percent
These are the costs you need to keep a roof over your head and live day to day. Think rent or mortgage, council tax, utilities, food, and transport. Lloyds and Halifax describe the rule in these three areas and put essentials at 50 percent.

Discretionary spending at 30 percent
This covers things you enjoy but could reduce if you had to, such as meals out, entertainment, hobbies, and holidays.

Saving or investing at 20 percent
This might include building an emergency fund, saving for a car or home improvements, or longer term investing.

A quick example

If your take home pay is £2,000 a month, the 50 30 20 split would look like this.

£1,000 essentials
£600 discretionary spending
£400 saving or investing

The point is not perfection. It is to give you a clear baseline so you can see where your money is going.

What if 20 percent feels impossible?

Many households find that essentials take more than half their income, especially when housing and energy costs are high. If that is you, start smaller.

Universal Finance suggests beginning with a lower amount and working up over time, and it also highlights that automating savings can help you stick with it. Even saving 5 percent consistently can build momentum.

A more flexible way to use the rule

Try this approach.

First, cover essentials and minimum debt payments
Next, pick a realistic savings target, even if it is small
Finally, use what is left for discretionary spending

As your situation improves, increase the savings line gradually.

Financial disclaimer
This article is for general information only and is not personal financial advice. Savings and investment suitability depends on your circumstances and goals, and rules and rates can change. If you are unsure what is right for you, consider using free guidance services or speaking to a regulated financial adviser.