Creating a Budget to Stick to in 2019 | Richard Banks & Associates, P.C.
We know how difficult it can be to create and stick to a budget, in fact, only about one-third of Americans maintain a budget. We also know that it is possible to do with the right motivation and setup.
Looking for a budget that will help you pay your bills, add to your savings and still allow some freedom for fun? Say hello to the 50/20/30 rule.
The 50/20/30 Rule
One budget you may want to bring into 2019 with you isn’t necessarily new and revolutionary but is more on the tried-and-true side of the spectrum. The 50/20/30 rule is a simple way to divvy up your money and can help you spend it more wisely.
With this budget plan, you divide your money into three categories when receiving a paycheck:
- 50% for your needs. This includes the essentials, aka those things needed to live. Utilities, rent/mortgage, groceries, prescriptions or gas for the car are included in the “needs” category.
- 20% for savings and debt. Money for your financial goals, such as savings, investments and debt reduction, is taken from this category.
- 30% for your wants. Think of this as flexible spending, or money for the things you want but could live without. Vacations, a new car when yours is still drivable and a new TV are a few examples of wants.
The 50/20/30 rule works because it is based off your personal income and is not an estimated amount taken from an average figure. Simply put: It is tailored to your specific situation and needs.
How to Start a 50/20/30 Budget
When first embarking on the 50/20/30 budget journey, you can relax knowing that there is no uncertainty to be had. This budget helps you establish clear goals involving your expenditures and savings plans, which helps make it more successful in the long run.
Evaluate your needs, financial goals and wants, and then get to work on creating that budget. The flexibility provided by the 50/20/30 rule can allow you to adjust the percentages a bit to make this plan work better for you. This is great news, because no two budgets should or will look alike.
Creating and sticking to a budget is the first step in moving yourself toward a healthier financial status. If budgeting is not enough to help curb your debts, you can speak to the bankruptcy experts at Richard Banks & Associates, P.C. to learn about even more options available to you.