50/30/20 An Easy Way to Budget
Posted by Caroline Constantine on Jan 07, 2020
50/30/20: An Easy Way to Budget
Budgeting can be a tricky thing for many people, especially if they don’t have the time or energy to carefully keep track of each penny. Those who would prefer a simplified version of the process may find luck with the 50/30/20 rule.
What is the 50/30/20 Rule?
The idea behind this rule is to put 50% of all your post-tax income toward needs, 30% toward wants, and 20% toward savings, debt or in this case, your monthly deposit into the Century program. This easy way to budget begins with mapping out the dollar amount for each category. For example, if you make $3,000 a month after taxes, you’d want to be allocating $1,500 on needs, $900 on wants, and $600 to settle your finances.
How Do I decide on My “Needs?”
Needs can be difficult to define for many people, but in general, include things like food, shelter, health insurance, utilities, transportation and general living expenses. As with any budgeting rule, the idea is to minimize the spending on these needs. For example, you may need to find cost efficient food options or carpool a few times a month to ensure you don’t go over 50%.
How Do I Keep Track?
There are only three categories to organize, so you’re merely lumping each expenditure into needs, wants or saving/ debt. Instead of carefully analyzing every cent, you only need to allocate your money so it fits into this rule. Just keep in mind that these are estimates If you go a few percentage points over in any category from month to month, it’s perfectly understandable.
How Does This Fit in the Century Program?
This budgeting plan can be a very helpful way to manage your money while on the Century program. By setting those benchmarks for yourself and earmarking 20% of your monthly income to go towards paying off debt, you may be able to add additional funds to your Century program. Adding additional funds can help Century negotiate better settlements, earlier in your program, meaning you can get out of debt even faster.
Is This Right for Me?
Not everyone can make use of this basic rule. Some people may need a more rigid structure to stick to the plan Others may live in an area with exceptionally high cost of living, making it nearly impossible to allot only half of their income to basic needs. You may need to adjust the percentages to fit the realities of your lifestyle and locale.
If you want to see your bank account come alive in 2020, there’s no better time to explore and implement new ways to save money. Instead of turning toward a traditional budget that includes coding nearly every purchase, the 50/30/20 rule can help you break down your income without the hassle.