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Thoughts for Today

Saving in your 20’s


I was inspired to write this post after reading about this so-called “50/20/30” rule that the Internet is trying to teach 20-somethings. I am here to help you Get Real. 

Some of you may know, I am currently taking my Canadian Securities Course, which is an in depth study of investing, retirement planning, taxation on income, etc; A deeper look into money management, per se. Some of you may also know that in the last year I have travelled for 6 months, purchased a condo in downtown Toronto, and am saving for a wedding in about 60 days! You wouldn’t believe the amount of people who look at me like I am a stripper – drug dealer, or maybe I am planting trees with money on them? WRONG. I am a super saver.

I have made a post before about saving, working – all of those things that I do. BUT, it still seems that there are so many people around me, and 20-somethings in general that need to be TAUGHT how to manage money. Not the advice that you read on Wikipedia people, advice from a person in their 20-somethings who is doing just that, managing my money EFFECTIVELY. I make money mistakes, of course I do. However, I recognize where the mistakes are being made – and most are made selfishly because I like to see my bank account grow.

Okay – after my rant, I will start to explain to you how much you should be saving in your 20-somethings, and exactly how much you should be spending. With that information, you can do with what you will. Our generation, unfortunately, doesn’t have access to the kind of pension plans, etc. that our parents/grandparents have had. We have much more work to do.

Alright, so this 50/20/30 rule (which I strongly disagree with) states this:
1. Your monthly expenses should encompass 50% of your income.
2. You should be paying off debt and saving with 20% of your income.
3. You have an allowance for entertainment, dinners out, etc. equating to 30% of your income.
** These figures are based on your AFTER TAX income

Where do I begin? I apologize to the Harvard graduate, Elizabeth Warren, I think your 50/20/30 rule is ridiculous.


The first lesson I would like to teach you – NO ONE IS THE SAME. Every financing decision, budget, savings plan, is different from person to person. So – to create a rule of thumb like this is just simply unreasonable. An individual is different from a family, who is different from a person close to retirement, which is different from a young professional. These figures should be made for YOU, specifically, not just any one person.


There is something to be said for the “50” part of this rule. Let me remind you what her “50” rule states:

  1. Your monthly expenses should encompass 50% of your income.

If your expenses exceed 50%, you are either trying very hard to impress someone, or you have gone crazy. I KNOW – a lot of you just moved to the big city, got a job, and are treading water to pay your $2000 rent and bills. Here is my tip: GET A ROOMMATE. We are in our 20’s. This is the time you can work and save without the strings of kids in college or retirement looming. GET A ROOMMATE, have some fun, start to minimize your expenses now while you can. If you are spending that money on your mortgage, OKAY, you got off easy this time. At least you are investing in yourself and in your future. Good on ya, you 20 something. But please, if you expenses exceed 50% of your after tax income, please reconsider your cable package, your cell phone bill, or the penthouse you are living in.


Onto the “20” part of the 50/20/30 rule. TWENTY PERCENT? THAT’S IT? Get real. If you have debt to pay off, you likely have interest you are paying along with that debt. You are basically throwing 20% of your income in the garbage. You are paying interest + the bare minimum of your debt, and maaaaaaybbe, just maybe you have saved a few hundred dollars along the way. If I were your advisor, I would tell you (especially in your 20-somethings) to save at LEAST 30-35% of your income. You are free birds, without health problems, bad backs – save your money. Just put it in the bank, that’s it.

I don’t want to toot my own horn, but I just might here – for the sake of numbers. Since I have been back from my travels, I started working right away and have managed to save approximately 60% of my income. July, a whopping 62.5% of my income was straight to the bank. That is THREE TIMES what this Elizabeth Warren is recommending. That doesn’t even include debt repayment or paying off my credit card (which was also paid to $0). My point is – it doesn’t matter HOW MUCH money you make. It matters how disciplined you are. I get greedy – my hard earned money is my hard earned money.


Spending. This is what th “30” section of the 50/20/30 rule is all about. Elizabeth Warren, a HARVARD graduate – is allowing you to spend 30% of your income on shopping, drinks, dinners, dancing, what have you. She is really kind. I allow between 10%-15% spending on my budget. Does this mean I am cheap, no. I am currently writing this while sipping a $40 bottle of wine. I tip my servers at least 20% and I do enjoy a nice meal here and there. This DOES NOT mean you have to sit at home like a hermit crab. This means you should be investing more in yourself (ie: your bank account), than going out to eat 5 days a week. You should be proud to watch your dollar signs grow, rather than buying a shirt that you will forget about in two weeks. When you don’t have enough retirement saved, I promise you will not remember that shirt anyway.

All in all, I think you have managed to see that I think this rule of thumb is absolutely insane. Unless she is trying to tell you that you can’t afford a car payment, but you can go out for steak dinners three times a week– I don’t see how it works. I understand that it is guideline, but the numbers just aren’t realistic for us 20-somethings. This is the most agile, fit, healthy, brainy we will be for the rest of our lives. Most of us are not yet putting children through private school, so we are free. You have so much wiggle room to save. Just do it.


This is my rule of thumb for you: 35/50/15

This I would LOVE to see. 35% of your income spent on expenses, 50% spent on savings and debt repayment, 15% spent on alcohol problem or your new haircut.

That 50% savings includes short term savings, long term savings, an emergency basket, and a dream basket. All the financial goodies you’ve ever wanted. If you want an even further breakdown of that 50% savings, I would be happy to break it down for you! Just say the word. I’m telling you friends. If you follow a stricter savings plan, I promise you – you will have a much healthier and happier financial future.

Put your loonies in the bank. ‘Till Next Time.

– T.

About Tara Murphy

Hi! My name is Tara Murphy. I am a self-proclaimed Blogger, foodie, and travel fanatic. Yes, I am one of those people who takes pictures of their food. Why? Because it is delicious, end of story. I created my first blog in January, 2012 before I started my 11-month journey around the world. I am now settled back in Toronto, Canada and am started a little thing called REAL LIFE. What even is real life? Who knows. All I know is I love life and I love writing. So I write about life, all aspects of it. The good and the bad.


One thought on “Saving in your 20’s

  1. Let me try to do your calculations… – with the figures I punch almost all twenty year old’s have about the same expenses – somewhere between 2,000 and 3,000/month just to keep the numbers easy
    Here’s my budget:

    You suggest this living expense should be 35% of a total budget – well….
    rent = $1000 – cause they have a room mate
    food = $400
    car payment, gas and parking OR public transit = $300,
    insurance – on house/rental unit, life and car (just to drive someone else’s car) = $100
    phone, internet, cable, hydro, netflix, electronics = $100
    = $1900/month

    Then ….
    You are suggesting that this amount is only supposed to be 35% of their take home salary – that means that they have to have a job that CLEARS them $54,000/year – HMMM…. I don’t know many 30 year olds who make that!
    As well, I’m not sure how you budget the other $2,250 (50% of the 54,000) for saving and dreams (I think your income expectation is the dream!) or $675 (15% of the 54,000) for alcohol and hair?

    DATA: Yes it’s a bit out of date but … I don’t imagine much has changed in the last decade…

    Stats Canada states that:
    Earnings and age
    The earnings of women increase in the prime income-earning years—up to age 54—then they decline. In 2008, average annual earnings for women aged 16 to 24 who were working full-time, full-year were $23,100. Earnings were highest, $52,800, for women aged 45 to 54 (Table 8). Women working full-year, full-time aged 55 and older had average annual earnings of $42,500.

    The U.S. Bureau of Labor Statistics, a division of the Department of Labor, regularly analyzes data from the Census Bureaus’s Current Population Survey to develop statistics on the U.S. workforce. BLS reports include data on earnings according to a worker’s age, gender, race, education level and other criteria.

    Median Weekly Earnings
    The population survey for the third quarter of 2010 show men (averaged over all age groups) earning a median salary of $813 a week, and women (averaged over all age groups) with a salary of $662 a week.
    That is between $42,276 for men and $34,424 a year for women…

    So my point is… it VERY MUCH MATTERS how much money you make!

    Because the average Canadian 20 year old has to cut out YOUR suggested 50% simply because they don’t have YOUR income to save for their dreams!

    Posted by Auntmoe | November 7, 2015, 11:31 am

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