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.
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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.
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