Is there anything more intimidating than trying to get your finances in order? It can feel overwhelming, especially when things are tight and stresses are high.
Luckily, there’s a simple-to-follow way to help make things a little less scary and a little more under control.
Take a deep breath and get ready to feel better. Let’s talk about the 50/20/30 budget rule.
First, what is it?
The numbers stand for percentages of your income that should be set aside and put toward certain expenses. The biggest number, 50%, is for your necessities: housing, food, utility, other bills, health insurance, car payments, etc. The second number, 20%, is for your future: it should go for savings and investments, including an emergency fund, retirement (in the form of a 401(k) or Roth IRA or another long-term fund), etc. The goal for the emergency fund is to have enough saved up to cover between three and six months’ worth of expenses, something that might feel impossible. But thinking ahead to a bad day that might not come means you’ll have money set aside when you need it. Finally, 30% is for wants, travel, a new car, subscriptions to streaming services, nights on the town, etc. This way, you’re saving up for something more immediate and fun, contributing to something you want to do, and feeling like you’ve earned it.
Now that you know what this is, how do you make it real? How can you make it work for you?
1. Take a look at your current expenses.
Get together all your bills and write everything down, either on paper or in a spreadsheet. List it all: from your rent or mortgage and car payment to every single utility, every streaming service, gas, food, childcare expenses, pet care expenses, etc. Account for every dime that is a regular expense. Then, add up your income. Compare the two. See whether your everyday expenses add up to more or less than the suggested 50% of your income.
2. Be honest.
If your current expenses are more than 50% of your income, it might be time to make some changes. If you find that you’re spending more on takeout than you realized, that’s an easy change to make — lookup copycat recipes and learn to make them at home, for example, or consider limiting your nights out to one or two a month instead of one or two a week. How many streaming services do you pay for every month compared to how many you use? There are little changes everyone can make if they sit down and think about it.
3. Get organized.
Once you’ve figured out where you can make some changes and start re-allocating funds, make it happen. Set up automatic savings accounts for your 20% and 30% banks, so to speak, and commit to sticking with your newly created budget. It might be difficult at first, but you can do it! Keep track of your spending and be honest about it. Account for every penny. If you mess up here and there, it’s ok — it’s a learning process, after all, and you’re changing your habits — but try to stick with the budget.
Finances are something everyone needs to know about, but very few people are comfortable having these conversations. Committing to trying to be better and smarter about money might seem scary at first, but it’s the first step toward building a better future for yourself and the people you love.
Connect with Davis Staffing
If the numbers don’t add up and it’s time to bring home more money, call Davis Staffing. We work with great companies looking for skilled workers just like you, and they can help get you to an income level that will ease some of that financial stress. Call Davis Staffing today, and let’s get to work — together!