Is The 50/30/20 Budget Rule Actually Realistic For Most Americans?

Inflation has the unique ability to affect all categories of your budget, making a budget plan like 50/30/20 nearly impossible to adhere especially when all categories cost more money for the same lifestyle. Inflation is the rate at which goods, services, and just about everything else in our lives increase in price. This can have a noticeable impact on our purchasing power as well as our ability to stay within a regulated budget like 50/30/20. While slow and steady inflation can be a sign of a healthy and growing economy, unpredictable or large changes in inflation can hurt many Americans. For instance, 2022 saw the highest average annual inflation rate in over 20 years (8%) which disproportionately hurt low-income families.

As of August 2023, the average U.S. inflation rate for the year has slowed down to 4.5%. While this is an improvement, it still adds an extra strain on many Americans who might be struggling financially. This is especially true when wages and income do not simultaneously rise to offset increased costs. Needs, wants, and savings are all negatively impacted by a loss of buying power, and facing higher costs on the same income can lead to increased stress and pressure on families. It’s also important to recognize that certain geographic areas can be affected more strongly by inflation and rising consumer prices than others. Much like cost of living, a specific geographic region can end up costing you, as a consumer, more.