A simple 50/30/20 budget can help you stay on track to reach the financial goals you’ve set. Here’s how to do it.
A simple 50/30/20 budget can help you stay on track to reach the financial goals you’ve set.
Here’s how you do it:
First, divide your after-tax income into three expense buckets: one for needs, one for wants, and one for savings.
Your “needs” bucket should take up about 50% of your income and include essentials like housing, car, utilities, health care, and minimum monthly debt payments.
Your “wants” bucket is for your larger non-essential purchases—for example a phone upgrade or a luxury vehicle—and should take up no more than 30% of your income.
Last but not least, your “savings” bucket should account for 20% of your income and include things like retirement accounts, investments, and emergency savings that’ll help you achieve a healthy financial future.
A simple 50/30/20 budget is easy to follow—and the peace of mind that you’re on the right financial path should give you the motivation to stick with it.
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