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There are dozens of choices when it comes to budget plans. If you’re still looking, or are completely new to the concept of budgeting, let me re-introduce you to an age-old budgeting guideline: the 50/20/30 rule. Even though it’s a classic, it bears a fresh look, especially through the lens of the modern American’s financial outlook.
Three Categories and What They Contain
The 50/20/30 rule splits up take-home pay into three large spending categories — fixed costs, financial goals, and flexible spending. Here’s a list of what each contains.
Fixed Costs (50%) – These are the expenses most vital to your survival, which don’t vary from month to month: mortgage, rent, vehicle payment and utilities. Some versions also include non-essential monthly subscriptions, since they require a monthly commitment and the amount doesn’t vary unless you choose to discontinue them.
Financial Goals (20%) – This category includes any monthly payments and contributions toward improved financial health: 401K and other retirement accounts (from post-taxed income), extra payments on credit card debt or student loans, building an emergency fund, and savings goals such as a down payment for a home or funding an education.
Flexible Spending (30%) – This category includes expenses that vary from month to month: groceries, gas, eating out, shopping, hobbies and entertainment.
Getting an annual raise or a promotion that comes with a higher salary is a great feeling. It makes you feel appreciated for what you do, and, if your finances were tight, it brings a sigh of relief.
What’s the first thing people tend to think of immediately after a raise? What to do with the extra income, of course, and usually, where to spend that sum. It’s not the immediate reward that’s the biggest problem though. Going out to a nice restaurant, taking the weekend away, or even purchasing an item you’ve had your eyes on for a while (assuming it isn’t a Lamborghini) is nothing to feel guilty about.
It’s when a little extra monthly income turns into an excuse for lifestyle creep (also called lifestyle inflation) that you need to really guard against. [ continue reading… ]
When we see a great deal, we are inclined to think that we are “saving money.” Some store receipts even help with this illusion by giving you a total of your “savings” at the bottom, so you can see what a savvy shopper you are.
However, in many cases, you might just be overspending when you think you are getting a good deal. Here are 3 ways you could be spending more than you should — even while thinking that great “deal” is “saving” you money: [ continue reading… ]
Probably the most common piece of personal finance advice out there is to save money by avoiding restaurants. It sounds so simple: just don’t eat out and cook at home or brown bag it. Lots of people do it and have no problem with it.
But, for some people, it can be tough. I touched on this last week on my post about spending frenzies; we all have our own weak spots when it comes to personal finance and what can be no sweat for one person can be a real test of willpower for another.
Here are some suggestions that can help you if you find it difficult to avoid the temptation to eat out. My approach to personal finance is holistic; I believe that other areas of our lives can affect our personal finances and becoming as healthy, balanced and happy as possible as people can empower us to take charge of our money. So bear with me if some of my ideas seem a bit out there. [ continue reading… ]
Just Google the term “get rich” and you’ll see a ton of results for ways to get ahead as easily as possible. And it’s not just get-rich-quick schemes too. There are now a growing number of legitimate money-making opportunities on and offline.
Still, there’s a gap between the number of people obsessed with getting rich and those who achieve this elusive benchmark. After all, the road to wealth is filled with hurdles — whether circumstantial, mental, or emotional.
Circumstances can be hard to overcome, but I think our biggest problem sits between our ears. You can be in the right place at the right time, with everything going for you, and still not get ahead. If desire and even circumstances aren’t enough, how do you know you’re prepared to get rich?
Used furniture can be a practical way to add to your home’s decor without breaking the bank. While the phrase may conjure up some idea of a couch found next to a dumpster or an ugly dresser handed down just in time for your first apartment, the fact is that it’s possible to find high quality used furniture that has little more wear and tear on it than the floor model at the brand name furniture store.
But many used furniture sellers know exactly what they have on their hands, leading to prices that are not so far off from what a brand new sofa or dining room table might cost you. That means finding the right deal can take a little work. These 10 tips can make it easier: [ continue reading… ]
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