What’s a 50-20-30 Budget?
A 50-20-30 Budget is one that most people like the best. It involves designating your after tax income to three categories, 50, 30, and 20. The rule is to allocate 50% of your income towards needs. 30% of your income distributed to wants and 20% assigned to debt and savings.
Budgeting Isn’t About Limiting Yourself… It’s About Making The Things That Excite You Possible.
50% Needs | 20% Savings | 30% Wants
A Money Strategy Based On After Tax Income
- 50% Needs ~ 50% of your income goes towards necessary expenses, like housing, food, utilities, auto insurance and healthcare.
- 20% Savings ~ 20% of your money is allocated to debt, savings and retirement.
- 30% Wants ~ 30% of your funds are spent on wants. Anything that’s non essential like dining out, movies, shopping, sporting events, cable tv, spas and vacations.
The Best Way To Stick To Your Budget Is To Start One
The 50-20-30 budget seems to be more palatable. This money plan allows more flexibility and is not so confining like the zero-based budget. The 30% wants category gives you the option to spend more on things that make life more enjoyable.
A Debt Problem Is, At Its Core, A Budgeting Problem.
What I like most about the 50-20-30 budget is the 20% allocated to savings and investments. Individuals should have at least three months of emergency savings on hand for unforeseen events. This money strategy gives you the opportunity to build towards having an emergency fund.
Budgeting is the first step towards financial freedom. So start your budget today. To help get started download our FREE budgeting spreadsheet. (after you click the link check your download folder to access)