![]() Only you can decide which of your expenses can be designated as “personal,” and which ones are truly obligatory. However, you have some wiggle room since you can decide upon the tier of the service you’re paying for. If you travel extensively or work on-the-go, your cell phone plan is probably more of a necessity than a luxury. These personal lifestyle expenses include items such as: It all depends on what you want out of life and what you’re willing to sacrifice. Some financial experts consider this category completely discretionary, but in modern society, many of these so-called luxuries have taken on more of a mandatory status. The second category, and the one that can make the most difference in your budget, is unnecessary expenses that enhance your lifestyle. If you’re thinking of relocating to a different part of the country, it’s a good idea to calculate your cost of living beforehand so you can know if you can realistically afford to live in that area based on your current total income. How much your essential expenses cost will differ for each person depending on where they live and what their lifestyle is. For instance, some people live in high-rent areas, yet can walk to work, while others enjoy much lower housing costs, but transportation is far more expensive. And remember, it’s more about the total sum than individual costs. The percentage lets you adjust, while still maintaining a sound, balanced budget. In general, these expenses are nearly the same for everyone and include: This will include your living expenses each month, which are essential expenses that you would almost certainly have to pay, regardless of where you lived, where you worked, or what your future plans happen to include. ![]() ![]() This might seem like a high percentage (and, at 50%, it is), but once you consider everything that falls into this category it begins to make a bit more sense. To begin abiding by this rule, set aside no more than half of your income for the absolute necessities in your life. The 50/30/20 budgeting rule–also referred to as the 50/20/30 budgeting rule–divides after-tax income into three different buckets: If you haven’t read through them already, we highly recommend going through them to get a comprehensive overview of budgeting. In the previous chapters, we discussed what to include in a budget and the various ways you can create your own budget, like with a budget template. Try the 50/30/20 Budgeting Rule & Take Control of Your Finances.Main Takeaways: How to Budget Using the 50/30/20 Rule. ![]() Ask Yourself: Why is a 50/30/20 Budget Necessary?.Use the links below to navigate or read all the way through to absorb all of our tips on how to budget using the 50/30/20 method: In this post, we’re taking you through the steps of budgeting using the 50/30/20 approach so that you can learn how to set up a budget that’s sustainable, effective, and simple. The 50/30/20 rule can serve as a great tool to help you diversify your financial profile, reach dynamic savings goals, and foster overall financial health. Budgets should be about more than just paying your bills on time-the right budget can help you determine how much you should be spending, and on what. The 50/30/20 rule (also referred to as the 50/20/30 rule) is one method of budgeting that can help you keep your spending in alignment with your savings goals. One way to do that is using Mint’s free 50/30/20 calculator to budget. So far in this series, we’ve answered important questions about budgeting, such as “ What is a budget?” and “Why is budgeting beneficial?” This series has been focusing on how using a budget can help you keep your spending in check and ensure your savings goals are on track. ![]()
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