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Enter the 50/30/20 rule.
Getty / yekorzh
These future decisions are dependent on your current spending and saving habits.
Budgeting is the place where you’ve got the option to (and should!)
speak up for the things you care about and explore your goals for the future.
Heres how to put the 50/30/20 rule to work for you.
If you havent already, estimate each of the recurring expenses you’re able to anticipate each month.
If youre spending over 50 percent on these necessities, start setting goals to reduce your costs.
Perhaps you could start small and findways to cut down on grocery bills.
Think: a new pair of shoes, drinks with friends, a premium Spotify subscriptionthe list goes on.
Finally, at least 20 percent of your income should go towards repaying your debt and growing your savings.
Bonus points if these payments are deducted from your paycheck automatically.
If you have room in your income, plan to save as much as you’re free to.
First, set up an emergency fund equal to three months of your income.
From there, prioritizesetting aside money for retirementand continue to grow your savings fund.
Once you build a comfortable nest of savings,investing should be the next stepin growing your money.
While the 50/30/20 rule is key to creating an effective, manageable budget, its only half the story.
When it comes to budgeting, its equally important to see how your spending measures up in real life.
You might have set a certain dollar amount for groceries, but are your bills actually within your limit?
There are many approaches to tracking your monthly spending, so find something that works for you.
Just remember that not knowing where to start is not an excuse to do nothing at all.
This both ensures accuracy and creates a sense of accountability.
Once youre comfortable with your spending, apps likeMintandPocketGuarddo the heavy lifting totrack the budget you just created.
Once youve mastered the basics, managing your money will become second nature.
