Senator Elizabeth Warren made a budget strategy popular, the 50/20/30 budget rule to reach your financial goals.
It’s basically separated by 50% on needs, 20% on paying debts or saving and 30% for just living how you like, meaning gym memberships or dinners in a restaurant, etc.
The 50% on needs are for bills you must pay and all those boring things an adult must do like car payments, insurance, groceries, etc., things like needs and obligations those must be covered and that is of course after-tax income.
If you’re spending more than that, take a look at what you can reduce or downsize to make it happen, yes maybe a smaller home or a more economic car.
The wants have a 30% spending budget and those are things that are not essential for your survival, but are things that make you happy or make life easier like going out to the movies or to a nice restaurant, something you collect or like to buy often, anything that is optional in your life but can also be reduced if you’re spending more than 30% and there are many ways to keep costs down depending on your lifestyle, you may not like it but it’s better financially in the long run.
And last but not least the 20% on savings or investments, for example an emergency fund (three months of savings at least) as well or investing in the stock market.
That 20% can also include debt payment.
Now that you will have some budget to pay your debts or invest, contact us so we can help you boost your score or help you with a house purchase, car loan or any other service.