The 50/30/20 approach to budgeting uses broad strokes to simplify the process by designating 50% of all income to essential expenses (the “must haves” like housing, utilities, groceries, and basic care); 30% to discretionary expenses (the “nice to have” items); and 20% to saving & investing.
Setting aside portions of your income for specific purposes is a tried and true method for improving spending habits, and the 50/30/20 technique takes it a step further – after essentials and savings are covered, the remaining portion is available to spend worry-free!
Automated monthly bill and credit card payments, transfers to savings or investing, and monitoring the remaining portion over as little as 3 months removes a lot of the guess work while you become accustomed to the method. Properly executed, the 50/30/20 Budget allows a low-stress balance between quality of life and responsible money management.
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Founder, Iseler Financial, LLC