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Budget for Multiple Financial Goals With the 50/15/5 Rule

https://twocents.lifehacker.com/budget-for-multiple-financial-goals-with-the-50-15-5-ru-1712442588

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Budget for Multiple Financial Goals With the 50/15/5 Rule
When you're trying to get your finances together, there's usually a question of trade-off. Do I pay off debt or save for an emergency? Do I save for retirement or a home down payment? Fidelity's 50/15/5 rule addresses the most important financial goals by allocating your paycheck accordingly.

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The 50/15/5 rule for multiple financial goals

The 50/15/5 rule for multiple financial goals
  • 50% of your income goes toward essential expenses: rent, bills, minimum debt payments.
  • 15% percent goes to retirement savings. They also suggest you increase this by 1% each year.
  • 5% goes toward unexpected monthly expenses or building an emergency fund.

What you do with the rest of the money it’s up to you.

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SIMILAR ARTICLES & IDEAS:

Budgeting = creating a plan to spend your money

Budgeting is simply balancing your expenses with your income.

It's a plan for the coordination of resources and expenditures. When you budget your money, there’s a desir...

How to create a budget

  1. Gather Some Financial Information: gather a detailed list of your income and expenses.
  2. Select a Budgeting Method: figure out how you’ll budget your money to meet your most pressing financial goals.
  3. Create Your Budget: tally up all your expenses and income to see where you stand and allocate expenses.
  4. Execute Your Plan: you can use a notebook, pen and paper, a spreadsheet or an online software.
  5. Reward Yourself: you can work a small percentage into your budget to treat yourself each month.

The 70:20:10 budgeting method

This method suggests that you allocate 70 percent of your income to expenses, 20 percent to savings, and the remaining 10 percent to debt.

70:20:10 may work for someone with a healthy emergency fund and minimal debt.

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Definition of a budget

Definition of a budget

A budget is an estimation of income and expenses over a set time. It is usually drawn up and re-evaluated periodically.

Budgets can be made for a person, a group, a busines...

Understanding budgeting

A budget shows the trade-off made when one item is exchanged for another. The result is:

  • A surplus budget, where profits are expected.
  • A balanced budget, where revenues and expenses are expected to be equal.
  • A deficit budget, where expenses are expected to exceed revenues.

Drawing up a budget means you'll know where your money goes, and you'll have greater control over your finances.

Corporate budgets

Budgets are necessary for running any business efficiently and effectively.

  • Budget Development Process. Assumptions related to projected sales, trends, cost trends, and the overall economic outlook is established for the upcoming period. The budget is then published and outlines the standards and procedures used to develop it. The master budget includes forecasts of cash inflows and outflows, budgeted financial statements, and an overall financing plan.
  • Static Vs. Flexible Budgets. A static budget remains unchanged over the life of the budget. A flexible budget has a relational value to certain variables, such as sales levels, production levels, or other economic factors.

3 Financial Basics

  1. Create a Financial Calendar: prevent yourself from forgetting quarterly tax payments and to get credit reports.
  2. Check Your Interest Rate: Pay off loans, open saving accou...

Budgeting Like a Pro

  • Consider an All-Cash Diet, as limiting yourself to physical currency combats overspending.
  • Set aside 1 minute a day to check on your financial transactions, to identify problems, track goal progress and set your spending tone.
  • Allocate at least 20% of your income to financial priorities like emergency funds, debts and retirement fund.
  • Budget about 30% of your income for nonbasic spendings, like entertainment. Abiding by the 30% rule, you can save and splurge at the same time.

How to Get Money Motivated

  • Draft a Financial Vision Board, it motivates and helps you to stay on track with your financial goals.
  • Set specific financial goals stating the reason, the way, numbers and dates.
  • Adopt a spending mantra, a phrase that serves as a rule of thumb for how you spend.
  • Love yourself. Taking control of your finances is part of that.
  • Make bite-size money goals. Make the bigger ones but also small step goals to get there.
  • Don’t be a financial fatalist, and switch to more positive mantras.
  • Get your finances and body in shape. The discipline associated with regular exercising translates to managing your money well.
  • Appreciate what you have now, instead of being a consumerist.
  • Get a Money Buddy. Studies indicate people pick up good habits from friends with similar traits.