The 50-30-20 Rule

Social entrepreneurship is the venture of starting a business in order to solve a social problem and create positive change. It is true that the aim is to address a social problem, but what about financing? Without a good financial plan someone can end in trouble. In order to avoid this, we choose to involve young people from the Virgil Madgearu highschool in an interactive activity to manage their virtual budget.

As an example of a spending plan, we introduced students to the “50/30/20” budget rule. Basically, they had to divide up their income and allocate it to spend: 50% on needs, 30% on wants, and 20% on savings. We prepared a pie chart broken up into these percentages and we gave students a monthly income.

To guide their reflection, they had to answer some questions: “what do you need to survive?” for choosing needs, “what brings you happiness?” for wants, and “in the future, what would you want to be able to afford?” for savings.

Our goal for them was to understand that it can be hard to sort out wants and needs, as these categories are very subjective, nevertheless, saving should always be a priority. They also learned how to effectively make choices by working in teams. One group even decided to include “friends” in their list of needs, and others wrote “money for college” and “helping our parents” in their savings category.

During the next session, each team took part in the elaboration of a plan for social enterprise. Under the guidance of youth workers well-trained in entrepreneurial guidance, young people, including those from disadvantaged backgrounds feel motivated and encouraged to continue on education and even start a business.    

By this approach, 10th grade students showed maturity and responsibility when approaching financial decisions, demonstrating an increased sense of initiative and entrepreneurship. We are proud of our results and we are happy and empowered to use the results achieved by the Erasmus+ Entrepreneurial mindset project consortium to Constanta.

Location: Constanta, Romania

Date: 14th of June 2021