Senator Elizabeth Warren’s 50-20-30 Thumb Rule allows you to navigate through your weekly, monthly or annual budget regardless of who you are– whether you’re a soccer mom, a businessman or a fresh graduate.
So, what is the 50-20-30 Thumb Rule? According to Warren, you should split your budget into 3 categories:
- Your Must-Haves or the 50
- Your Savings or the 20
- Your Wants or the 30

Now, as per the Ministry of Manpower, the income of an average working class Singaporean for 2016 was 4056 SGD per month, which translates to 48,672 SGD per annum. Thus, your after-tax income or real income as per the Inland Revenue Authority of Singapore is approximately 47,746 SGD. You can then prepare your annual budget through 3 simple steps:
Step 1: The 50
The rule recommends that you set aside at least 50% of your income for your basic essential needs such as housing and related expenses, food and groceries, clothing and the like. It is essential that you differentiate between your “needs” or “must-haves” and your “wants”, at this step.
Anything whose absence would seriously impact the quality of your life qualifies as a “must-have”. On the other hand, anything whose absence would only lead to a minor inconvenience serves as a “want”. Such “wants” should not be taken into consideration at this stage.
Step 2: The 20
The next step focusses on setting aside 20 percent of your remaining funds for debt repayments and saving up in lieu of an emergency or for future retirement. Of course, if you’re fresh out of college, retirement may seem quite far away. However, you could always instead use these funds for your future home or other such investments that you may soon want to make.
Step 3: The 30
The last step focusses on setting aside the remainder of your total real income for satisfying all “wants”. It is this last step of budgeting that differentiates the smart-spenders from the thrifty ones. For instance, although budgeting for categories like groceries and clothing may fall under the initial step. It is important to make note of the type of groceries or clothing that is being considered. Although both Bread and Oreos fall under groceries, Oreos do not qualify as a want.

As with everything, certain items have such loose definitions that it’s hard to determine which category they may fall under. For example, credit card payments and insurance payments can fall under the 20% as well as the 50% category. So, how do we identify where each payment falls? As far as credit card payments are concerned, the minimum payment must be considered as a “need”. However, any additional payments towards your credit card must be included in the 20% as a debt repayment. This is because these additional payments do not prevent you from using your credit card. Similarly, in today’s world of uncertainty purchasing an insurance is essential and should be considered as a “need”. However, insurance payments can come under the 20% category as insurance premiums help you prepare better for the future. In fact, Hive Up can help you organize your savings and investments by directing you to the right advisors and enabling you to focus on your 30% of “wants”!
Of course, Warren’s Rule is NOT a drudgery-based budget method that must be strictly adhered to if you want to achieve financial success. Rather, Warren herself recommends that you simply use it as a framework and tweak the numbers based on your own personal needs and various other factors. The primary purpose of this rule is to help you identify where you spend and where you can cut-back on your expenses and save for your future.