deepstash
Beta
How to Set Up a 50/20/30 Budget
Reducing your essentials
Play around with your monthly budget to see where you can reduce your monthly spending:
- You could contact your internet company to get a discount.
- You can clip coupons and use rebate apps to spend less on your monthly groceries.
- You could set aside less for medical expenses if you have an emergency fund.
836 SAVES
3.2k READS
SIMILAR ARTICLES & IDEAS:
5
Key Ideas
A Monthly Budget For Your Money
No matter how little or how much money you earn, creating a monthly budget is one of the most important aspects of managing your finances. What gets measured gets managed.
...
The Envelope System
The Envelope system is a way to track your variable expenses like food, entertainment, and drinks.
This method, preferably used weekly, allocates a certain amount in each category in labeled envelopes (food, drinks, movies, etc.). Once the envelope is empty, you are done spending in that category.
How to Create a Good Budget
The principles that make a good budget, something you can stick to:
- Being Realistic: Being too strict is a recipe for failure.
- Making Adjustments: A budget is not set in stone, but a fluid thing.
- A Team Sport: If you live with a partner or spouse, you have to agree mutually on how to budget the financials.
- Expect the Unexpected: Keep an emergency fund, ideally 3-6 months of necessary expenses.
- Budgeting the Expected: Certain upcoming expenses need to be budgeted in advance, like property tax, holiday shopping, etc.
2
Key Ideas
The 50-20-30 rule
It is a budget rule to help people reach their financial goals. It states that:
- You should spend up to 50% of your after-tax income on needs and obligations that you must-have or must-...
Needs, wants and savings
- Needs: these are those bills that you absolutely must pay and are the things necessary for survival (rent or mortgage payments, car payments, groceries, insurance, health care, minimum debt payment, and utilities).
- Wants: these include all the things you spend money on that are not absolutely essential (dinner and movies out, vacations, electronic gadgets, etc.)
- Savings: this includes adding money to an emergency fund in a bank savings account, making IRA contributions to a mutual fund account, and investing in the stock market.
2
Key Ideas
Steps of the zero-sum budget
- Determine how much you make on any given month.
- List your bills: Once you determine how much money you'll make this month, figure out how much money you need t...
The zero-sum budget
Using this method forces you to “spend” every dollar that you make, by allocating all of your earnings into the different categories that your finances require.
It prevents waste and maximizes your income, with the ultimate goal of reaching zero at the end of each month.