The report is due tomorrow
The report is due tomorrow. apartment that’s a little bit cheaper and I can save some money on rent and then also maybe I don’t need to get the most expensive car insurance I can get a cheaper car insurance and maybe I can take the bus to work and save some money on transportation so if I make those changes I can get to the 50 30 20 rule
In this video, I’m going to show an example of what a budget could look like and how you might want to modify it depending on your goals, wants, needs, and what you want to save for. I’m going to do it on a spreadsheet, but you could do a budget on a piece of paper, or find tools online that can help you set and keep track of a budget.
The first thing I start out with is my after-tax income, because that’s the actual amount of money I have to spend in a given month. I’m going to do everything here on a monthly basis.
Now let’s think about the needs, wants, and savings. As we talked about in the introduction video, needs are things that you need to survive, like a place to live, electricity and water, heating, transportation, car insurance, food, communication, and the Internet. For this budget, I’ve listed all of the need expenses and they total to $1780 per month.
This next column is our wants. These are things that are nice to have, but not necessary, like eating out, a gym membership, going out for entertainment, and fancy clothes. All of that combined is $795.
We already see something interesting going on here. If you take $1780 and divide it by $3000, you get that it is 59% of this $3000. So already we are violating the 50/30/20 rule.
Our savings are not where we want it to be either; it’s not at that 20%. If we really wanted to meet the 50/30/20 rule, we would be spending $1500 on needs, $900 on wants, and $600 is what we would have saved.
If you’re this person and you want to get to the 50/30/20 rule, you might want to rent a slightly smaller apartment, get a cheaper car insurance, and take the bus to work to save some money. If you make those changes, you can get to the 50/30/20 rule. In fact, we’re now under budget on both needs and wants, and because of that, we are saving more than 20%. This is not a bad thing as long as you are living in a sustainable way and getting your needs met, while still allowing for some of your wants. It’s good to save even more than 20%, and it shouldn’t be a source of stress if the numbers are a little bit lower than 20% in one month or another.
The important thing is to think about your finances, and take information from your pay stub, bank account, and credit card statements to figure out all of these payments. If you go through this exercise, you will be surprised.
I encourage you to think about where you think you’re spending your money, and then after doing the math, see where you’re actually spending it. This will make you more conscientious and give you clues on how you may want to modify your lifestyle.