What's The 50/30/20 Rule For Budgeting?
If you’re hoping to have a certain amount of money at a specific time in the future, budgeting is crucial to ensure you reach your financial goals. First, you should determine how much you make and how much you typically spend in a month, and to do this, the 50/30/20 budget hack is very useful.
According to the 50/30/20 rule, your paycheck should be split up into three categories: 50% to your necessities, 30% to your wants, and 20% to paying off debt or your savings. The most important thing is to differentiate your wants and needs, so a need would be groceries, rent, and insurance, while your wants include eating out, personal care, and vacations.
To keep yourself from feeling overwhelmed, cut things out slowly as you go, and make sure to document where your money is currently going so that you can make adjustments as needed. When removing things from your budget, start with your wants and move to your needs, and if you must cut back on necessities, you may need to make big changes like selling your car.