There are many budgeting techniques that exist to help you stick to and keep a budget. At UOU one of our favorites is the 50/30/20 budget rule. This is a simple and easy to understand rule that is applicable individuals in a wide variety of circumstances. This rule is a template that has been proven to help individuals efficiently manage their money and save for emergencies and retirement.
The rule is very simply that you should take your post-tax income and divide it into 3 categories of spending: 50% on needs, 30% on wants, and 20% on savings.
It might seem difficult to distinguish wants from needs. We recommend you think about needs as things you must do or bills that will absolutely come due. For example, items like rent, utility bills, transportation costs, grocery bills should be counted as needs. Such items should comprise 50% of your post-tax income. After your needs are met, you should then be paying yourself, ie. Putting 20% of your post-tax income into savings or any debt repayment you might have. Once you have paid yourself, you can then spend the remaining 30% of your income on anything else you might want. Such as, entertainment, travel, shopping, etc.
The purpose of the 50/30/20 rule is to balance paying for necessities while being mindful of long-term savings and retirement.
How to use it
Step 1: find your post-tax income
Step 2: calculate your 50/30/20 percentages of your income
Step 3: adjust and monitor your spending/savings
To read even more in-depth about this budget we recommend you review the Investopedia article here: https://www.investopedia.com/ask/answers/022916/what-502030-budget-rule.asp
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