How To Create A Budget You’ll Truly Stick To (2 of 4)
Consider The 50/30/20 Method
As we’ve said, going by category is for detail-oriented people. As such, it can be very restrictive for many. Fortunately, there are other methods out there and one such method is very popular: the 50/30/20 method.
This is by far the most popular one out there as it allows you more room for savings, debt payments and also personal wants. You don’t feel like you have to deny everything for the sake of sticking to your budget.
The method goes as follows:
- 50% of your income goes towards essentials.
- 30% goes towards what you want.
- 20% goes to savings and debt.
The beauty of this method is that instead of many categories broken into sub-categories, you only have three to deal with.
Your math is made very easy as you only need to consider how much money is coming in every month and plan accordingly.
For example, if you bring home $3000 a month, you know that $1,500 is going towards living expenses, $900 – towards any other personal expenses, and $600 – towards savings and debt. From there, you can keep a running tally of those costs.
In the event you’re reaching your budget, you can begin cutting back in other areas.
Say, you’ve spent a lot on clothing this month. As a result, you can cut back on ordering take-out and dipping into your essential budget to get food to cook.
All around, it’s a great method.
Why Not Also Use The 80/20 Method?
Another version of the 50/30/20 method is the 80/20 one. Basically, this is a less restrictive method than the previous one. If you’re not a big fan of three categories, you’ve got only two to worry about now.
That said, this method does have its practical applications. Say, you’re living in a town that has a high cost of living or you think the budget amounts from the previous method feel too restrictive.
The benefit of this method is that you only really need to focus on a single number.
The downside is that the expenses can pile up if you’re not too careful about them. The goal in the end is to be able to keep 20% of the income that you’ve made and not have your expenses sink into that.
How To Stick To The Budget?
So now that a budget has been made, the other challenge is actually sticking to it. All of those numbers in your head provide no meaning or significance if you can’t stick to them at all.
On top of that, sticking to this budget for only a few months will yield results, but won’t be able to push you further ahead. Your budget only really starts to shine when you’re able to stick with it for at least a year.
Fortunately, you are not on your own in this. Many people know the struggle of sticking to a budget and have created all kinds of tools and systems. While that’s great, it still demands a level of accountability from you. If you get an app, you’ll need to record every dollar spent. If you get close to your budgeted amount, you’ll need to be able to curve your spending tendencies.
That aside, here are some of our go-to methods to deal with that easily.