TikTok users are making some old budgeting tricks fashionable again. Simple rules of thumb lend themselves brilliantly to quick videos, and they’ve taken off among people looking for straightforward answers to rising prices and tight budgets. One popular one is known as the 50/30/20 rule.

It’s based on the idea that you should spend 50% of your budget on the essentials, 30% on the nice-to-haves in life, and put 20% aside for the future. And because it has gained so much traction, it’s worth exploring whether this rule really works.

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Rules like this can be handy for people who don’t know where to start. By splitting your budget up like this, it makes you distinguish between ‘needs’ and ‘wants’, which is useful for those who tend to spend on the nice-to-haves without really thinking about it.

Some people will do this by putting a budget together and planning ahead. Others will just ask themselves before they spend ‘Do I really need it? And can I afford it if I’m going to stick to the spending rule?’

Good way to keep savings in mind

It's also a useful way to ensure you keep savings in mind. Often people are focused on making ends meet month-to-month, so saving and investing for the long term is put on the back burner. They only realise this is a mistake when it’s too late. By aiming to put aside 20% for the future, it means saving and investing is always factored into your plans.

The level of saving required isn’t wildly optimistic either – unlike the FIRE movement for super-early retirement. Putting aside a fifth of your income is so much more manageable than the FIRE aim of saving up to 70% of it.

However, it’s not going to work for everyone. In fact, figures from the HL Savings & Resilience Barometer show that it’s not going to work for the average person – largely because the cost of putting a roof over your head is so high in the UK.

If you take a middle-income household that earns £2,835 a month after tax, the cost of their basic essentials is £1,719 a month – which is 61% of their income. If you then put 30% aside for ‘wants’, you’re left with next-to-nothing to save for the future. It means you need to flex your ‘wants’ to fit the cash available, and free up enough money for the future – which might work out as 60% ‘needs’, 20% ‘wants’ and 20% ‘saving’.

Saving depends on your circumstances

The balance between saving today and spending tomorrow will also depend on your circumstances. Some people will need to pay down expensive short-term debts, while others will need to build emergency savings. Others have fallen well behind on pension investing, so they need to prioritise that too.

Often people will want to do all of these things at once, so will split the cash between the different goals. If you’re falling short on all fronts, you might put aside more than 20% if you can manage it.

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It means that while simple rules of thumb like this can be useful for keeping you roughly on track, you need to consider what they mean for you. The bad news is that things get more complicated when you factor your circumstances in, so there’s some maths and planning involved.

However, it beats the alternative of spending 30% on ‘wants' before realising you need to spend 70% on ‘needs’ and have nothing left to save for the future.

• Sarah Coles is a personal finance analyst at Hargreaves Lansdown and co-presents Switch Your Money On podcast.

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