Homeownership can be a source of great pride and accomplishment. You achieved the American Dream! But homeownership also comes with a distinct set of financial responsibilities. Homeowners need to secure their financial future with smart budgeting—and the 50-30-20 Rule is an excellent place to start!

What is the 50-30-20 Rule?

The 50-30-20 Rule is a budgeting guide that presents a general idea of how much to allow for monthly expenses while also having fun and saving for the future. Ideally, half of your income should be allotted for monthly bills like your mortgage, insurance premiums, utility bills, and car payments. Use 30% of your income for discretionary spending, such as entertainment or dining out, and invest the remaining 20% into savings or retirement accounts.

While many households may not follow the 50-30-20 Rule to the dollar, when used as the framework for a monthly spending-to-savings ratio, it can be a great way to keep yourself on track for long-term financial stability.

How Does Owning a House Save Money?

While a home is likely one of the biggest purchases you will ever make, homeownership can also help you save money and secure a stable financial future. Here’s how:

Protection. Having a set mortgage payment can protect your budget against market fluctuations that can affect the price of rent.

Equity. Owning a home can also be viewed as a forced savings plan. You’re required to make monthly payments toward your investment that will—ideally—build equity over time.

Tax breaks. Deducting interest accrued on your mortgage each year can lower your annual tax bill.

Lower utility costs. When you own your own home, you can make smart upgrades that maximize your energy efficiency and lower your bill.

Household Budgeting Tips Summary

You have to be budget-conscious when you’re planning to buy a house, but to maintain financial stability, you must also keep good money habits after becoming a homeowner. Follow the 50-30-20 Rule and maximize the savings that homeownership offers to start yourself off on the right foot!