Budgeting is something everyone needs to practice.
It can be hard, especially if you don’t think you make enough to put any in savings after bills. I started budgeting recently when I realized I had nothing to fall back on if my cat became ill or need repairs on my car.
50/30/20 rule is a system created by breaking down your monthly expenses. It’s great for those who have the same pay every month. This method can also work for those who work in the food industry or a job where monthly income isn’t always the same. Slight adjustments make this method easy for anyone.
Add up all your expenses.
This includes rent, utilities, student loans, and groceries. All the things that are non-negotiable. This alone will be a real eye opener at how much your paycheck is spent by default.
Normally, this will equal to around 50% of your monthly income.
Now add unnecessary expenses.
Essentially, unnecessary expenses include internet, eating out, gym, and cell phone bills. But we all know these are actually necessary – things you could live without though if mandatory. This should be 30% of your monthly income.
These add up fast.
What’s left over?
20% left to savings and future goals. Looking to finance a new computer or save up for a house? That’s where this will come from.
If you spend the same every month it’s easy to direct deposit to a savings account. Then, you’ll never have to think about it. This process is almost fool-proof and leaves you with money for going out with friends, and all those lattes you need to get through the week!
It’s beneficial to transfer something over, even if you’re not able to deposit the same amount of money every month. It’s been a goal I’ve set for myself this year. Now If I ever have an emergency, I am confident I can support myself, and that’s a great feeling.
How do you organize your monthly budget?