Learn How EASY the 50/30/20 Budget Really Is!
What is a 50/30/20 budget?
Using the 50/30/20 budget streamlines how you think about creating a financial plan. You take your after-tax income and split it into three categories: your needs, wants and savings.
To put it simply needs or expenses that you cannot avoid. These Essentials would be difficult to live without. They may include monthly rent or mortgage, electricity and gas bills, transportation, insurances and basic groceries.
Thirty percent of your income is spent on things you want. Wants are non-essential expenses, things that you choose to spend your money on. These could include dining out, clothes shopping, gym memberships, entertainment, subscriptions like Netflix Amazon Prime or gaming and non-essential groceries.
The final twenty percent goes to savings, debt or both. Although minimum payments on debts are considered needs, any extra payments to reduce your debt and future interest can be classified as savings.
Consistently putting aside twenty percent towards savings or debt is key to financial stability whether your ultimate goal is building an emergency fund, paying off high interest rate debt or preparing for a down payment on a house. With this plan, you are in control and can spend your money without guilt because it’s all part of your budget.
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