A first monthly household budget takes six steps: write down your take-home income, list your fixed bills, track everything else for a month, set a limit for each category, put money aside for the costs that come once or twice a year, and review at the end of the month. You can do the first two today. This page goes through each step, with an example on EGP 10,000.
What is the 50/30/20 rule, and does it fit Egypt?
The best-known budgeting rule comes from the 2005 book All Your Worth by Elizabeth Warren and Amelia Warren Tyagi: 50% of take-home pay for needs, 30% for wants, 20% for savings. Needs are what the household cannot run without (rent, food at home, bills); wants are what could wait (eating out). The book was written for readers in the United States.
In Egypt, needs usually take more than half. In CAPMAS's Household Income, Expenditure and Consumption Survey for 2019/2020, the latest with published tables, urban households put 27.7% of their spending into food and drink, 20.4% into housing, water, electricity and gas, 9.5% into health, 7.7% into transport and 7.6% into education. Those five alone come to about 73%.
Two cautions. That is a share of what was spent, not of income. And the housing figure includes an estimated rent for families who own their home. It shows roughly how large needs are, not what yours should be.
What split should I start with?
If you have never tracked your spending, we suggest starting from 65/20/15: 65% for needs, 20% for wants, 15% for savings. This is Flosyfeen's suggestion for a first month. It is not an official rule and there is no study behind it; it only moves 50/30/20 towards the spending pattern above.
Once you have a month of your own numbers (step 3), use those instead. If your needs come to 75% of income, your budget starts at 75%.
How do I build the budget, step by step?
1. Write down your take-home income
Use the amount that actually reaches you each month after tax and insurance, plus any regular second income. If your income changes from month to month, use the lowest month of the last few.
2. List your fixed bills
Rent, the gam'eya instalment, internet, phone, and any other instalment. These amounts are known, and they are due whether or not you plan for them. Subtract them from your income; what is left is the money you actually decide about.
3. Track everything else for a month before you set limits
For one full month, write down every pound: the market, the kiosk, transport, food delivery. Do not try to cut anything yet. Guessing does not work here: research published in the Journal of Marketing Research in 2022 found that people under-predict their future spending. The studies were run in Canada, the UK and the US, not in Egypt, so take it as a reason to check for yourself, not as a number for Egypt.
If you are not sure how to start logging, read what expense tracking is and how to begin.
4. Set a limit for each category
At the end of the month, add up each category and sort it into needs, wants or savings. Set next month's limit for each category close to what you really spent. If the total is more than your income, lower one or two wants categories, not everything at once.
5. Put money aside each month for the costs you know are coming
School fees and private lessons, Ramadan and Eid, the summer electricity bill: you know about all of them now, but they do not arrive every month. Estimate each one for the year, divide by 12, and put that amount aside every month. The gam'eya instalment is different: it is due every month until the gam'eya ends, so it belongs with the fixed bills in step 2.
Thinking of these costs in advance changes the estimate. In a UK experiment with more than 1,700 people, the control group under-predicted its spending by 32%, while people first asked to think of one unusual expense that might come up came within about 2% (Chicago Booth Review).
6. Review at the end of the month
Compare each limit with what was spent. One month over a limit is normal. If the same category runs over for several months in a row, the limit itself is wrong: raise it and take the difference from another category. Prices also move during the year, so limits need re-checking; see household budgeting under inflation.
What does a budget on EGP 10,000 look like?
This is an example with round numbers, chosen so the arithmetic is easy to follow. It is not a real household and these are not market prices; rent alone varies widely by city and neighbourhood. Take-home income is EGP 10,000 and the split is 65/20/15.
| Group | Item | EGP a month |
|---|---|---|
| Needs | Rent | 2,500 |
| Needs | Food at home | 2,200 |
| Needs | Electricity, water, gas and internet | 500 |
| Needs | Transport | 500 |
| Needs | Medicine and doctors | 200 |
| Needs | Set aside for school fees and lessons | 500 |
| Needs | Set aside for the higher summer electricity bill | 100 |
| Needs | Total (65%) | 6,500 |
| Wants | Eating out and delivery | 600 |
| Wants | Clothes | 400 |
| Wants | Outings and gifts | 600 |
| Wants | Set aside for Ramadan and Eid | 400 |
| Wants | Total (20%) | 2,000 |
| Savings | Gam'eya instalment | 1,000 |
| Savings | Emergency money | 500 |
| Savings | Total (15%) | 1,500 |
| All | Total | 10,000 |
The gam'eya instalment sits under savings here because the money comes back to you when your turn comes. The three "set aside" lines come from this calculation:
| Cost | In the year | Set aside each month |
|---|---|---|
| School fees and lessons | 6,000 | 500 |
| Ramadan and Eid | 4,800 | 400 |
| Higher summer electricity bills | 1,200 | 100 |
| Total | 12,000 | 1,000 |
Do I need an app, or is a spreadsheet enough?
A notebook or a sheet in Excel or Google Sheets is enough: one row per category, with the limit, what was spent and what is left. Its weakness is that every expense is typed by hand, and nothing warns you when you get close to a limit.
Flosyfeen's Budget screen does the same job: you enter your monthly salary, split it across needs, wants and savings, set a limit per category, and it shows what is left and warns you before you overshoot. The limits themselves should come from your own month of tracking.