Where does insurance park under the saving guide, 50/30/20 rules?

Insurance is important.

Park it under expenses, i.e. the "50" in the 50/30/20 income rule recommendation.

Cheers.

- Jeffrey (jeffreyleezq.com)

Hi anon,

Although I use a 4-3-2-1 frame work, insurance would be considered an expense under the '5' portion of the 5/3/2 rule.

This refers to insurance for the purpose of protection, and not wealth accumulation. Thus, your health insurance, Long Term Care, CI, term, disability income, personal accident etc, would fall under this category. Whole life would fall under this category too. Such plans are identified as having a payout when an event occurs.

For wealth/retirement, plans like endowment, annuities, retirement income plans would fit into the 30% section of the 5/3/2 rule. Such plans are identified as having a payout when a certain point in time is reached.