Question

Suppose your net income every month is $3,750. In the 20-50-30 Model, how much of

your net income would be in each category?
Answer in three complete sentences to explain how much of your income is in each category.

Answer 1

In the 20-50-30 Model, 20% of your net income would be allocated to savings, investments, or debt reduction. This means that $750 of your monthly income would go towards these goals.

50% of your net income would be allocated to necessities, such as rent, groceries, and utilities. This means that $1,875 of your monthly income would be spent on these essential expenses.

Finally, 30% of your net income would be allocated to discretionary spending, such as dining out, entertainment, and hobbies. This means that $1,125 of your monthly income would be available for these activities.