People hate budgeting even much hate towards the word budget.
I can tell you because, I was too hate it.
Why everyone hate budgeting?
Because it’s hard to stick with it and the worst part is it feels like a chore thereby no one really wants to do it.
But a good budgeting can save you from worst time. A good budgeting helps your money problem go away also you become financially independent fast.w
We all are different and our methods of saving and earning are also different thereby there are different budgeting types.
There are many budgeting types to follow but the most effective one i follow is 50/30/20 budgeting, other one that didn’t work out for me is Zero-Based budgeting it might work for some, so it depends.
As time passed I realized how important and useful a budgeting actually is. A good budget is very useful in managing your expense and savings that’s basically your whole finances.
With her daughter, Amelia Warren Tyagi, Elizabeth Warren, a Massachusetts senator who was voted one of Time magazine’s 100 Most Influential People in the World, coined the phrase “50/30/20 law” for investing and saving.
In 2005, they collaborated on a book titled “All Your Worth: The Ultimate Lifetime Money Plan.” Here’s how Warren and her daughter suggest applying the rule:
What Is The 50/30/20 Budget and How Does It Work?
Consider the following scenario for a household with a monthly net income of $5000:
The aim is to invest no more than 50% of your after-tax earnings on necessities.
To begin, set aside 50 percent of your monthly earnings after subtracting all applicable taxes. If you’re self-employed, your net income is your earnings after taxes (Gross income minus the business expenses).
No matter how much money you make, the “Needs” category includes all the products and commodities you need in your daily life. Food, clothing, mortgages/housing rent, transportation, and other expenses may be included.
Here’s a rough breakdown (not to scale):
$900 (mortgage + rent)
$500 in groceries
Vehicle is worth $300.
$100 for clothing and washing
$700 for utilities
TOTAL= $2500 (50% of $5000)
This 30% is referred to as “Fun-Money.”
This could include things like entertainment, eating out, and cable/Netflix subscriptions, among other things. We just need something exciting to look forward to in our lives. This 30% will go into the enjoyable aspects of the project. The aim is to invest less than or equivalent to 30% of your take-home pay.
One thing to keep in mind is that if you’re on the verge of going bankrupt or desperately need to save money, this 30 percent is the secret. The less money you spend on “wants,” the more money you can save.
The 30 percent breakdown is as follows:
Budgeting Tools You Must Have:
- YouNeedABudget :is a budgeting app that works automatically (and now web-based too). Rather than simply monitoring the flow of money in and out of your account, YNAB helps you gain control over your finances. It also provides online courses and other useful information to help you get on board with your budgeting.
- Ebates:Every time you shop online, Ebates gives you the opportunity to save money. Ebates is also completely free, which adds to its appeal. Many people shop online without realizing that they can save a ton of money by using Ebates.
- Trim:It’s an automated platform that can support you with your finances even more. It’s easy to set up and needs very little maintenance.
Are you ready to dive into the 50/30/20 budgeting method?