By Katherine Lordi - Try this simple budgeting framework.
This rule divides your income into three broad categories: 50% necessities, 30% wants, and 20% savings, investments, and debt repayment. Here’s a closer look at each.
Needs are expenses you cannot avoid. What are the needs in your life? Examples include:
On the other hand, wants are goods and services you desire that are not essential and are often for fun! Examples include:
- Going out to a restaurant
- Going to a concert
Remember to pay yourself first by putting AT LEAST 20% of your income towards savings, investments, and paying off debt in order to prepare for future wants and needs!
It is simple.
It helps ensure that you pay yourself first.
It helps you be smarter and more successful with your money.
Next Story: The Envelope System
Back to Home: Stories Homepage