The 50/30/20 rule is a simple budgeting guideline that helps individuals manage their finances effectively. According to this rule, you allocate 50% of your income to needs, such as housing, utilities, and groceries. The next 30% is designated for wants, which includes discretionary spending like dining out and entertainment. The remaining 20% of your income should be directed towards savings and debt repayment. This approach encourages a balanced financial lifestyle, ensuring that essential expenses are covered while also allowing for personal enjoyment and future financial security.