The first steps to budgeting!

It’s no secret that budgeting isn’t always easy and it can be daunting on knowing where to start!

So here is an unwritten rule to use when it comes to figuring out how much you should be saving and spending.

It’s called the 50-30-20 rule.

This is the first step and an easy way to break down your after-tax income to assist you in meeting your monthly expenses without missing out on the fun things in life.

The breakdown of the 50-30-20 rule:

• 50% of your income is for EXPENSES

This includes any house payments or rent, insurances, phone bill, groceries and debt payments.

• 30% of your income is for LIFE

This is percent of money is for you to use towards yourself. This could include nights out with friends, getting your hair done or gift purchases.  

•  20% of your income is for SAVINGS

This is the money to put away towards a big goal. It could be savings towards a holiday, a house or an investment.

These percentages may vary to suit your life.

For example, you might need 60% of your paycheck to go to needs if you’re living in an upmarket area or groceries are a little extra for you per week. However, this also might make you take a second look at your monthly expenses and see where you might be able to cut down. For example, it might be time to look at buying the unbranded food products or trying out ‘click and collect’ online instead of being tempted to over purchase.

Set goals!

Get yourself motivated and set goals in place that you want to achieve.

Be sure to make them realistic and achievable in accordance with your calculations.

Keep on track.

It’s important to make sure you are keeping on track and hitting your percentages. So keep a weekly reminder in your phone or calendar to check where you at and if need be reassess what you are spending money on.

For more information and assistance on budgeting and finance get in touch.