The 50-30-20 Rule for Nigerian Millennials & Gen Zs

4 min read

As members of Gen Y (Millennials) and Gen Z, we face unique financial challenges in the Nigeria of today. First off, nobody told us. Nobody prepared us. And we were not informed. From navigating rising living costs, to managing relationships, managing debts and at the same time, establishing our careers. It’s a lot. But the good thing is that we learn smart and we learn fast. We have learnt from our predecessors, and we have done our research. And so, we are taking important life steps. Steps like taking control of our finances early on. One effective strategy that can help us achieve financial stability is budgeting. Basically the 50-30-20 rule. Yes, you’ve heard about it, but nobody has really tailored it to our generation.  We delve into how you can wield this budgeting approach and win in your finances below.


Understanding the 50-30-20 Rule

The 50-30-20 rule provides a framework for dividing your income into three categories: needs, wants, and savings. Here’s how it works:

  • Allocate 50% to Your Needs: Meeting our basic needs is essential, especially in an economy where expenses like rent, utilities, healthcare and don’t forget enjoyment, can eat up a significant portion of our income. Prioritize essentials like rent, groceries, transportation, and healthcare, allocating 50% of your income to cover these necessary expenses. Enjoyment falls into another category – Wants.

  • Allocate 30% to Your Wants: As young Nigerians, we work hard, and it’s crucial to enjoy the fruits of our labor. The 30% allocation allows us to indulge in our wants and desires without compromising our financial goals. This is where budgeting for your enjoyment comes in. This category covers expenses like dining out, entertainment, fashion, travel, and other discretionary spending. It’s important, however, to strike a balance between treating yourself and being mindful of overspending. But what about savings?

  • Allocate 20% to Your Savings: Saving for the future is a vital part of financial planning. This is how you ‘pay yourself first‘. The 20% allocation toward savings helps us build our Sleep-well money, plan for retirement, or invest in our long-term goals. Establishing this habit early on can provide a safety net and lay the foundation for financial security.

Applying the Rule to Nigerian Financial Realities

If you live in Nigeria, you will agree that we face unique financial circumstances that require adaptability. Here are some relatable aspects and tips to consider when applying the 50-30-20 rule:

  • High Living Costs: As we witness the constant rise in living costs, from food items to fuel to housing and education. It’s important to be realistic about our needs and adjust our budget accordingly. One thing we consistently preach is Going Together; you can consider sharing accommodation with flat mates or even shopping for groceries with your neighbours, siblings or friends to buy in bulk and cut costs. You can include your living costs within your 50% category.

  • Debt Repayment: We’ve told you about good debt vs bad debt. Many of us are burdened with different forms of debt. While these payments may feel overwhelming, it’s essential to include them within the 50% needs category. With a budgeting template you can prioritize making consistent payments to reduce your debt over time and free up resources for other financial goals.

  • Side Hustles and Freelancing: Nigerian Millennials and Gen Zs are known for their entrepreneurial spirit. Side hustles and freelancing have become common to supplement income. When budgeting, factor in these additional earnings to maximize your wants and savings allocations. Remember to save a portion of your side hustle income to fuel your long-term financial goals. You can allocate a lot of the funds from here to your 20% & 30% categories.

  • Investment Opportunities: Nigeria offers various investment avenues, such as stocks, bonds, real estate, and entrepreneurship. Allocating 20% of your income to savings opens up possibilities for investments that can yield long-term returns. Conduct thorough research or consult with a financial advisor to make informed investment decisions that align with your goals.


  • Tech-Savvy Financial Tools: Utilize technology to your advantage. Numerous financial apps and online tools are available to help you track your expenses, set financial goals, and stay accountable. Explore popular options like Vested to simplify your financial journey; whether you choose to build, manage or secure your money by yourself or with others.

Taking control of your finances is a crucial step towards a secure and fulfilling future. The 50-30-20 rule offers a practical framework for Millennials and Gen Zs to navigate their financial challenges effectively. By allocating your income wisely between needs, wants, and savings, you can achieve a balance between enjoying the present and securing your future.

Remember, the journey to financial well-being starts with setting goals, tracking expenses, and making intentional choices. Embrace the 50-30-20 rule as a guiding principle and adapt it to your unique circumstances in Nigeria.

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