How To Budget Your Money With The 50/20/30 Guideline?

How To Budget Your Money With The 50/20/30 Guideline?

In consideration of our money, there is no shortage of ways to spend it. Many people would ask, "Where should my money be going?" Situation varies. Some may hurry to pay off debts, some have to pay expensive house rent, some may pay a down for a house or a car, and so on. Determining how much you should be spending and how to allocate your money is never to be easy.

Though there isn't a hard-and-fast rule, LearnVest has come up with a general benchmark to help you if you are starting to set up a budget: the 50/20/30 guideline. Getting into this habit, and your will find budgeting much simpler.

50% of Your Income - Essentials

50% of your income should go toward paying for the absolute necessities, which are the expenses to keep up the fundamentals of your daily life: housing, transportation, food, utilities.

20% of Your Income - Financial Obligations

20% of your take-home pay should be directed toward things you must do, but can go without. This category is mainly your saving obligations which everyone should strive for, including paying for credit card bills, saving for retirement, building an emergency fund, and other larger saving priorities such as paying a down for a new house.

30% of Your Income - Flexible Spending

Spare 30% of your take-home pay toward day-to-day expenses, which can be different from month to month, depending your habit, hobby, entertainment style, shopping plan.