These three simple money rules can help with budgeting and investing in 2025

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These three simple money rules can help with budgeting and investing in 2025


If you’re looking for some relatively simple concepts to guide your finances, consider the following three rules of thumb in the coming year. They touch on budgeting, investing and retirement-plan withdrawals.

As general rules, they won’t apply to everyone’s situation. But at the least, they can provide a starting point for dealing with issues that have long vexed many people.

This framework can help determine how and where to spend your money. Under this rule, as explained by NerdWallet, you would allocate 50% of your after-tax income to pay for necessities including groceries, housing, utilities, transportation, insurance, any child-care expenses needed so you can work, plus minimum-required loan and credit-card payments.

Another 30% would go toward “wants” such as restaurant meals, gifts, recreational travel and entertainment. The remaining 20% would go toward further debt repayment, to build up an emergency-savings fund and then for other types of savings and investments.

“Over the long term, someone who follows these guidelines will have manageable debt, room to indulge occasionally and savings to pay irregular or unexpected expenses and retire comfortably,” according to NerdWallet, which recommends the system.

That’s the appeal. The challenge is in making this system work in reality, as devoting a mere 50% to necessities won’t be easy for a lot of people. Also, separating needs from wants can be difficult. As noted, NerdWallet divides credit-card and debt payments into two categories: Paying the minimum due would be a necessity, but applying extra money would fall into the 20% category for debt payments and saving.

If you can’t regularly meet the parameters, adjustments might be in order. For example, if you can’t adhere to a 50-30-20 mix, try for 60-30-10. Modifying a budget would be better than giving up entirely. And as much as possible, automate deposits and various payments so you don’t need to think about each decision.

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One of the toughest challenges to investing is figuring out how and where to spread your money. Over time, a diversified stock-market portfolio will almost always outperform bonds, for example, but at the price of white-knuckle rides along the way.

Enter the 60-40 rule, which calls for placing 60% of your long-term investments into stocks, stock funds and other riskier investments. The rest would go into bonds, bond funds, perhaps bank certificates of deposit and other conservative holdings.



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