I’m sure many have heard of the 50/30/20 calculator as a way to budget out one’s monthly income after taxes have been deducted. Fifty percent goes to needs, thirty percent goes to wants, and twenty percent goes to repayments and savings. Many struggles, however, are figuring out what kinds of expenses should or shouldn’t fall under each of these three categories. Here is a simple way to start:

Necessities (50%):

– Food

– Rent

– Transportation

– Utilities (if not already included in rent)

– Insurance

– Necessary loan payments

Wants (30%):

Anything that is not essential for living and working

– Monthly subscriptions (Netflix, Hulu, Spotify, Disney+, you get the picture)

– Travel…not taking that trip to Florida won’t kill you

– Entertainment

– Eating Out (this includes coffee)

Savings (20%)

The category most people view as unnecessary too much of the time. Emergencies and the future do exist. You want to be prepared for them. Money is savings go toward:

– An emergency fund

– A retirement fund –either through a 401k or a personal fund

– Paying off debt–high-interest rates will kill you if you let too many months go by

Ask yourself if you really need to buy that iced coffee each day for $5+ when you can just make coffee at home for around 20 cents a cup. Instead of eating out with friends and going to dinner or brunch (or eating outside/ordering at this time), cook homemade meals together. It saves money and gives you a fun activity to do. This doesn’t mean you have to be totally frugal and deny yourself a fun time. Treating yourself every once in a while won’t break the bank. However, you probably don’t need that extra cocktail or a new sweater. Putting that money in savings or investment will go a lot further. 

https://www.thebalance.com/how-to-make-a-budget-1289587

https://www.thebalance.com/creating-a-monthly-budget-316118

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