One of the hardest parts of getting your money in order is creating a budget.
At first you feel optimistic and full of energy and only lose steam after 30 minutes of Excel troubleshooting, irregular expenses and the determination of the "normal" expenses for eating.
For this reason, the 50/2030 method is our preferred budget: it is suitable for every income and every need – regardless of whether you earn $ 8 an hour or $ 1 million a year.
The tools you need to use the 50/20/30 method
Before we look at the exact breakdown of the budget, we would like to introduce you to a few tools that you can use to make this process particularly smooth:
A very simple Excel spreadsheet that you can use to track your expenses or. If you don't feel comfortable with Excel, a pen, a notepad and a calculator will do.
An all-in-one checking and savings account so you have your money in one place and it's easy to manage. We recommend using Aspiration & # 39; s Spend and Save accounts because you can earn up to 5% cashback * on your debit purchases and Interest on your savings. ** It takes five minutes to register,
Now you have what you need to be successful. HIt is the 50/20/30 glitch. To help you get a good feel for it, we hypothesized someone who earned $ 50,000.
50: cost of living
The "50" of the 50/20/30 method corresponds to 50% of your income. This goes towards the cost of living. Think: rent, mortgage, utilities, groceries, car payments, gas and loan payments.
If you make $ 50,000 a year, that's about $ 2,000 a month. (This is before tax. If you set up your own budget, you need to consider taxes and other salary deductions.)
Since most of these expenses are fixed, you can predict how much you will spend each month in this category. So add your monthly fixed costs in your Excel worksheet (or your notebook).
If you have more than 50% of your quota, that's fine. This budgeting method offers some flexibility so you can shorten one of the other categories. Or, even better, try saving your bills yourself. Pro tip: car insurance is one of the easiest places to get started.
You want to manage the money for your living expenses from your checking account. However, don't forget yours Aspiration debit card You can get cash back to buy your groceries, fill up with gasoline and pay the monthly utility bills.
20: Money goals
What are your monetary goals this year?
You want to use 20% of your income to achieve these goals. This can include investments, savings and debt relief payments above the minimum amount. If you earn $ 50,000 a year, you will reserve around $ 800 a month for this part of your budget (also before taxes).
Once you've set your goals (make sure you're realistic), go ahead and automate them.
For example, if you want to save 10% of every paycheck this year, set up recurring deposits Your aspiration accounts, Send 90% of each paycheck to your donation account and the other 10% to your save account. That way, you won't be tempted and you won't even have to think about saving.
Then when something happens (heaven forbids an emergency) and you need money from your savings, you're only a few steps away from transferring it to your donation account. Simple.
Aspiration also offers a range of mutual funds and IRAs for retirement. So if you want to focus on investing or increasing your retirement assets, you can do so through the app.
30: Personal expenses
One of the hardest things about budgeting is that you feel totally restricted. No more Starbucks runs, no more new clothes, no more holidays, no more fun.
But the budget doesn't have to work that way. That is why we love this method because 30% of your income is earmarked for "fun money". For someone who makes $ 50,000 a year, that's about $ 1,200.
Well that's not the case Necessary That means you go out and blow up your money on a single target run – although we could buy out the candle area entirely.
Instead, keep this money in your checking account and use it to have a drink with your friends, enjoy something to take away with your partner or put it in your vacation fund. If you have anything left aspiration makes it super easy to just add it to your savings account at the end of the month.
This type of budgeting is also flexible. So if you spend more than 50% of your income on living expenses, you might save 5% of your fun money. Or, if you still have high interest rates on credit card payments, devote more to your budget to your money goals than to your fun money.
Ready to create a budget that you can actually manage?
Regardless of whether you earn $ 8 an hour or $ 1 million a year, you can easily adjust the 50/20/30 budgeting method to your needs.
Start your newly discovered budgeting journey with the right tools. All you need is an Excel spreadsheet (or a notebook, pen and calculator). We recommend a shared spending and savings account like that of Aspiration. This makes it easy to transfer money between your accounts and keep track of your spending and progress.
With aspiration, it literally takes five minutes to Sign up for the Spend and Save accounts,
Oh, and consider the money you earn from the chargeback and interest savings as a nice little bonus and scoop it into your fun money.
You deserve it!
Carson Kohler ([email protected]) works for The Penny Hoarder. She is a big fan of optimizing her money accounts so she doesn't have to manage and monitor multiple accounts every month.
The Aspiration Spend & Save account is a cash management account opened by Aspiration Financial, LLC, a broker-dealer registered with the Securities and Exchange Commission (SEC) and a member of the financial industry regulator (FINRA) and the Securities Investor Protection Corporation (SIPC). Aspiration Financial, LLC (Aspiration) offers brokerage and securities products. The subsidiary Aspiration Fund Adviser, LLC, an investment advisor registered with the SEC, offers investment advice. Aspiration Fund Adviser, LLC and Aspiration Financial, LLC are subsidiaries of Aspiration Partners, Inc. Neither Aspiration Partners, Inc. nor any of its subsidiaries is a bank. Aspiration is committed to donating 10% of our profits to charity.
* Customers receive cash back for all purchases with an EC card. Customers can also get additional cash back for purchases from select retailers. Cash back percentages are subject to change at any time without notice. Cash Back is credited to the customer's Aspiration Spend account once on the first day of each calendar month. Aspiration reserves the right to reverse cash back transactions under certain circumstances and to terminate a customer's cash back function if the function is misused. This cash back rewards program is subject to change at any time without prior notice from Aspiration. More information can be found here.
** The annual percentage return (“APY”) of the Aspiration Spend & Save account is variable and accurate from 28.01.2020, Prices may change from time to time without notice. In order to receive an APY interest of 1.00% on the Aspiration Save account balance in a calendar month, an external deposit of at least USD 1,000 in this calendar month is required to an Aspiration Cash Management account or an investment account , If the external deposit requirement cannot be met, the account holder can qualify for APY 1.00% of the Aspiration Save account balance each calendar month if the Aspiration Save account balance is USD 10,000 or more in that calendar month , If none of these conditions are met, the APY for this calendar month is 0.00%. The minimum deposit to open an Aspiration Save account is $ 10.00. Pay What Is Fair fees charged directly to the Aspiration Save account can reduce earnings. For more informations, Click here,
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