Let’s look at the 20 percent recommendation, which comes from a popular budgeting formula called the 50-30-20 rule. 50-30-20 comes from Elizabeth Warren—yes, that same Elizabeth Warren. Before she entered politics, Warren had been a law professor with special expertise in bankruptcy and also co-wrote books about why middle-class Americans go broke and how to avoid that dismal fate. She suggested the 50-30-20 rule, which she called the Balanced Money Formula, as a way to help people maintain financial stability.
