Budgeting For Dummies
Budgeting For Dummies
What Is A Budget?
A budget is a visual representation of income in versus income out. This will give you an overview of your finances and showcase any deficits in regards to living above your means or show you areas you need to improve in. There are many various types of budgets ranging from the popular 50-30-20 rule to the 60-30-10 rule. Continue reading to learn about the different budgeting styles. Since this is just a guideline, find what works best for you and your lifestyle!
What Is The Purpose Of A Budget?
Personal finance is just that – personal. It is not one-size-fits-all but it is a customized guideline to stick by. The purpose of a budget is to assist in keeping track of expenses so that your expenses do not exceed your income.
The 50-30-20 Rule
This rule consists of spending 50% on essentials (no…guacamole on your Chipotle is not a need), 20% on savings, and 30% on whatever your little heart desires (within reason).
The 60-30-10 Rule
This rule’s target audience is the avid budgeter with the financial means to save aggressively. This rule is comprised of saving or investing 60% of your income, allocating 30% towards essentials, and the other 10% towards wants.
Use Your Resources
There are many free and paid resources available to help you budget. I have included a simple monthly budget Microsoft Excel template in my resources section that’s supported on multiple platforms and the template can be modified based on your personal budget. To find additional free budgeting spreadsheets and apps please check my resources section for more information.
How To Start
Take the first step and just do it. Remember, “start then learn…don’t learn then start” (because you will never do it)!
There is a quote from the book Atomic Habits that says “you’re chasing the same outcome because you never changed the system behind it. When you solve problems at the results level, you only solve them temporarily. In order to improve for good, solve problems at the systems level. Fix the inputs and the outputs will fix themselves.”