Budget My Paycheck With Me!!
Come Budget my paycheck with me using the 50/30/20 method! This method splits your check up between “Needs”, “Wants”, and “Savings” categories and depending on how much you want to save verses how much you want to spend this method could look a little different. I’ve also seen 70/20/10 where needs took most of the gross income and I’ve seen 50/10/40 where savings was higher and the method was created for a higher savings ratio. So let’s break my check down.
1. FIRST I CALCULATED MY GROSS INCOME.
I did this by adding all three of my income revenues together. Including my side hustles.
2. I CALCULATED THE “NEEDS” BUDGET.
The needs budget, or the necessity expenses- things like housing, transportation, medical, utilities- is calculated by dividing your gross income in half or by 2. This budget for me is $1468.79. My necessity expenses need to be under this dollar amount. After adding up the total of all my “need” expenses I did have $304.64 left over.
3. NEXT I CALCULATED 30% OF MY GROSS INCOME FOR THE “WANTS” EXPENSES.
I multiplied my gross income of $1468.79 by 0.3 to get the amount of $881.27 which is 30% of my total income. This is allocated to “wants” such as, streaming services, internet services, fast food and shopping days, and so on. My expenses need to be under the budget of $881.27. After adding them up they totaled in $245 even. And I had a left over of $626.27.
4. LASTLY, I CALCULATED 20% OF MY TOTAL GROSS INCOME TO SAVINGS.
To get this amount I multiple 0.2 by $1468.79. This gave me $587.52. I also added the left over amounts from the other two categories since I was below the budget on both. That totaled in $1528.43. This amount went into savings. My savings include a sinking fund and an emergency fund. Emergency being for things like a flat tire, a pipe that busted, an ER visit etc. And the sinking fund for things like vacation, birthdays and Christmas.
If this method is done right it’s so easy to see where all your money is going to and helps you focus on saving money. You can also edit the savings to be more and the wants to be less of you really want to budget well.
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Budgeting is essential for financial stability and achieving your goals. The 50/30/20 rule, which divides income into Needs (50%), Wants (30%), and Savings (20%), is a helpful guide for managing personal finances. When applying this method, first identify and calculate your gross income, including side hustles. For the Needs category, focus on essential expenses like housing, utilities, and transportation. Ensure these expenses do not exceed 50% of your income. For example, if your gross income is $2,000, your needs budget would be capped at $1,000. Track actual spending closely to avoid surprises. Next, allocate 30% of your income to Wants such as entertainment, dining, and shopping. Balance your lifestyle choices while ensuring you save adequately. If you consistently spend less than your set budget, consider reallocating the surplus to your savings or emergency fund. Finally, dedicate 20% of your gross income to savings. This portion can build an emergency fund for unexpected expenses or contribute to long-term savings goals. Regularly reviewing and adjusting your budget can aid in building a sustainable financial plan. Engaging in budgeting can improve financial literacy and instill confidence in your financial decisions, ultimately leading to financial freedom. Whether you’re just starting or seeking to refine your budgeting skills, the 50/30/20 method offers a clear framework to manage your finances.
Love the break down! If you don’t mind me asking, where do all your incomes come from? What side hustles do you do?