Ever get a paycheck and wonder how much of it you should spend without feeling guilty? The 50/30/20 budgeting rule is a simple way to know what to do with your money:
50% – NEEDS
50% of your paycheck (or less) should pay for your needs like rent, gas, groceries. Basically, it’s everything you need to maintain a healthy life. If your monthly rent is more than half of your monthly paycheck, consider living elsewhere or cutting your other expenses.
30% – WANTS
30% of what you earn can be spent on anything you want. Whether you see cute shoes or want to go out for a very expensive dinner, the collection of these expenses should not be more than ⅓ of your check. This way, you don’t have to feel guilty about spending some money on yourself.
20% – SAVE
You should put 20% of your paycheck into your savings account right away. Collecting money in this account is beneficial for emergencies and unexpected expenses. In the long run, this savings account can be used to purchase something big like a house or a car too.
Sometimes it’s okay to spend more in one category rather than saving in another. Using this as a basis, you can even change up these percentages to better fit your financial goals.
If you want to learn more about saving and the 50/30/20 split, check out more blogs here.
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