It’s time to discover how to organise your finances with our quick guide on creating a budget plan using the popular 50-30-20 rule.
Why is budget planning important?
Why is budget planning important? Following a budget plan can help you take control of your money, showing you where your money is going and whether you have enough to pay any expenses.
It can also help you save for future goals such as buying a house or going on vacation. By setting a budget, you can prioritise your spending and make sure you are not overspending in certain areas. This can help prevent financial stress and allow you to live within your means.
Additionally, budget planning allows you to see where your money is going and identify any unnecessary expenses that may be draining your funds.
What is the 50-30-20 rule?
One way to create a budget plan is by following the 50-30-20 rule, which involves dividing outgoings into three categories: needs; wants and savings. We’ve created a quick guide to help you get started.Â
The 50-30-20 rule is a simple and effective method for managing your finances. It involves allocating your income into three categories: needs, wants, and savings.
Needs = 50%
50% of your after-tax income to go to your needs, such as: housing; transportation; insurance; groceries; and healthcare.
Wants = 30%
A further 30% of your after-tax income can go to your wants, such as: takeout dinners; new gadgets; concert tickets.
Savings = 20%
And finally, you could leave 20% to help you prepare for your financial future e.g. paying off debt and building savings.
Need some more information? Watch the video below for tips on creating your 50-30-20 budget plan.Â
Remember, budgeting is about setting financial goals, tracking your spending, and making adjustments as necessary. It’s important to be realistic and flexible when it comes to creating a budget that works for you.
Create your budget plan today
Get in control of your spending, try out our simple budget planner. To make your results more accurate, try get as much info together as you can before you start, such as bank statements and bills.Â
Click here to get started with budgeting by using our free online calculator.
- The information provided is for guidance and educational purposes only. Serve and Protect CU does not offer regulated financial advice. Please seek independent financial advice.
