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Personal budgeting techniques6/22/2023 ![]() ![]() The 50/30/20 budget is based on personal finance “rules of thumb.” 2: 50/30/20 Budget How to Use a 50/30/20 Budget, With Free Templates It’s also a great tool for folks just learning to budget as it provides the most detailed financial data of any of the other methods on this list. This method is ideal for anyone who prefers a hands-on approach to budgeting. This method forces you to spend time each month creating a detailed plan for your spending and savings in the coming month, which naturally prepares your budget for increases in spending that occur around events such as holidays, wedding season, and back to school. Your budget doesn't have to be perfect-it just has to be right for you.If you don’t use all the dollars assigned to a specific category, then the funds can be rolled over to a different category. Knowing your finances in this way will prepare you for unexpected expenses or financial setbacks.ĭon't be afraid to try different types of budgets until you find the right one (or a combination of methods). ![]() To stay on track with your budgeting goals, Rapley recommends using a flexible payment tool like Affirm, which allows you to spread out the cost of purchases at retailers like Target and Walmart without any late fees.īudgeting will help you identify your spending habits-good and bad-so you can figure out any expenses you can do without and have a true picture of your cash flow in and out. "A budget can be a north star for those who want to hold themselves accountable as they work toward a specific financial goal," says McCreary. Whether it's paying off student loans, buying a home, or saving for retirement, creating the right budget will help you get there. Set some goals for your money, and use your budget to work towards them. Set realistic spending goals for yourself being too rigid can have the opposite effect and can lead to impulse buying. "You may be surprised how many seemingly small purchases add up over the course of a month, and how much you end up saving if you find certain days to avoid spending," says McCreary.Ĭheck in on your spending every few weeks (or whatever deadline makes sense for you) to see how you're doing and if you need to adjust anything in your budget. "One of the best ways to stick to a budget is to not pay people for things you can do yourself-until you get to a point where you can afford to pay people to do those things," says Rapley.Īnother tip is to set aside one day a week or a few days month where you don't spend any money-cook meals at home or find free activities instead. Try not to put yourself in situations where you know you'll spend money, like going out for dinner or pedicures. Now that you have made your budget, it's time to stick to it. You can also download a budget app for an even easier way to keep track of your budget and spending.Ġ3 of 04 Avoid Situations Where You're Likely to Spend Your budget has to work for you," says McCreary. ![]() "You can always change the percentages based on your lifestyle. Split your expenses into three categories-50% for needs, 30% for wants, and 20% for savings or paying down debt. This will give you a good picture of how much you're saving versus spending, and allow you to identify areas where you can possibly cut back.Ī simple structure like the 50-30-20 budget can help you track your spending without having to maintain a bunch of categories, recommends Colleen McCreary, chief people officer and financial advocate at Credit Karma. Rapley recommends simply writing down your expenses: purchases in the last month (plus annual or quarterly charges) and subtracting your income from your expenses. "A lot of people think that you have to have these complicated budgets, these complicated spreadsheets-and you grow to that," says Tonya Rapley, millennial money expert and founder of the financial education and lifestyle blog My Fab Finance. This way, it's not overwhelming and will be easier for you to maintain. When you're creating a budget for the first time, try to keep it as simple as possible. ![]()
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