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Budget Breakdown: The 50/30/20 Rule

Educated Latina

Managing money can be scary, frustrating, and so mysterious; one day you have money in your account and the next day it’s gone. See! A mystery right? Well,  it doesn’t have to be. Educated Latina is excited to collaborate with:


A company focused on understanding personal finances, getting out of debt, and building a strong financial future for young Latinx. Through its online community and in-person support, Dinero Diaries seeks to create an open dialogue about personal finances specific to Latinx communities.



In this three-part series, Co-Founders Camila Antonia and Laura who will be solving the mystery of our missing money by helping us understand personal finance through practical tips sprinkled with their personal experiences.

Budget. You’ve most likely been told to create one so many times. But are not sure how to even start one. Well, not to worry, Camila Antonia is introducing a guide on how to start one. Check it out!


Today I’m going to talk about the 50/30/20 rule. It’s a monthly budgeting rule that I’ve heard a lot about from financial educators. It’s a helpful way to break down your spending and see what proportion of your spending falls into different categories.

So, let’s pretend that your budget is a huge pie of $2,500 a month. That’s $2,500 that you see coming through your bank account each month*.

*Note that I am including $2,500 as post-tax. For those who have a regular salary, this is essentially what you see coming in the bank each month. If you are self-employed (like a contractor), this example is assuming that you have already taken out your taxes.

50% of $2,500= $1,250 For Essentials

Essentials are your basic expenses that cover monthly needs. I also like to consider that my debt payments are essential (non-negotiable), so I budget them in my essentials category.

Examples of essentials might include:


-Food (more specifically, groceries that you cook at home)

-Debt payments (credit cards, car loans, personal loans)

-Transportation costs (gas, car insurance)

-Health costs


30% of $2,500= $750 For Wants

Consider other areas of your life that you enjoy having. For me, it’s the gym, getting my hair done, and having money to go out dancing at least once or twice a week. This is the fun category and probably looks very different for different people. I try to be realistic about what I spend my money on for fun so that I do not feel guilty when I’m treating myself.

Examples of wants might include:

-Going out to eat


-Hair and nails

-Drinks and bars

-Clothes and shoes

-Pets (even though they’re like family, they are still a want and not a need…sorry my pet people)

20% of $2,500= $500 For Savings

The least flashy but the most important to build long-term stability.

Your savings might include:

-Retirement account, such as a 401(k), IRA, or 403(b). We will have entire other blog posts about these types of retirement accounts. The important takeaway here is to invest in your retirement account. Starting early and contributing regularly is key to long-term financial security.

Colchoncito. You know, the emergency stash that you have under the colchon in case of an emergency. Except… please don’t keep it under your mattress. Start building an emergency savings account for an unexpected job loss, car repair, or health costs. It is not a matter of if you will need to dip into these funds, but when. A good rule of thumb is to try to have about 6 months of your regular spending saved in this fund. (I know, this seems like a lot to me too. But I’m committed to getting there).

How This Works For Me:

I have reduced some of my expenses to be able to fit into these categories. I realized that I needed to reduce my “fun” expenses because I was spending too much money and not saving enough. I am taking a  temporary break from salsa classes, going out to eat, and buying clothes.

This formula is also not a perfect fit for everyone. If you can’t afford for your essentials to stay under 50%, then think about ways you can rework your expenses in a way that fits for you. I am considering increasing my savings to 25% and reducing my fun to 25% as well because I feel like I am catching up from a couple of years of not saving a. single. penny.

Below is a personal example of how I break down my expenses.


We hope this was helpful! Do you have any


Camila Antonia has a Master’s degree in Public Health with over 4 years of health program implementation and improvement work. Camila Antonia applies her holistic understanding of health and wellness by creating content for Latinx communities to engage in conversations about personal finances. Camila Antonia began her Dinero journey after realizing how much credit card interest she had paid in one year alone. Despite having a decent salary at the time, she realized that she had slowly accumulated lots of debt in her post-college years. Since then, Camila has decided to take steps to not only improve her personal financial journey but to also share what she learns along the way as a co-founder of Dinero Diaires, LLC.

In her free time, Camila enjoys salsa dancing, working out, traveling, and spending time with her partner and family.

Come back on June 10th for the next article in this series, when Laura talks about balancing family and money.  You definitely don’t want to miss it! 


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