Planning a monthly budget is one of the main ways you can take control of your finances in a proactive way. Whether you’d like to save for retirement or big expenses, cut back on debt, or just have more money left over at the end of each month, a budget is crucial to your financial health. But how much should you really be saving in your monthly budget? Here are a few tips on crafting a budget that will work for you and your family.
Tracking your spending, savings, and earnings each month might seem like a lot of work, but your bank account will thank you in the long run. If you set up an organized system, you can track your earnings from your main job and any side gigs, save up to meet short- and long-term financial goals, and have at least a bit left over for the “fun stuff” as well. You can also use a monthly budget to track your bad habits, noticing patterns you tend to fall into that are preventing you from reaching the money goals you want.
The bottom line is that if you want to get somewhere better financially, you have to know where you are first. You’re probably making mistakes with your money now that are hurting your bottom line. A budget can help you get back on track and on the way to financial stability or even wealth.
Particularly if you don’t already have a planned budget, the 50/30/20 budget plan is the best one to start with. It’s simple, straightforward, and ready-to-go.
In the 50/30/20 budget, you allocate 50% of your monthly earnings to what you need, like food, rent, medical bills, utilities, tuition, and paying off debts. You set aside 30% for what you want, like dinners out, clothing, or any other “extras,” even small ones like your weekly (or daily) Starbucks. 20% of your monthly earnings are set aside for the future, such as retirement and emergency funds.
No matter how much you currently earn, the 50/30/20 plan allows you to get a little of everything. You meet all your needs, save for the future, and get a little bit of what you want along the way.