Basic budgeting: the only basic B you need
A few years ago I sat in front of my laptop with my bank and loan accounts glaring at me. I thought to myself, if I owe more money than what I have saved… is the money I’m earning and saving really mine? It was in that moment I became a philosopher. The thought pierced my soul as if I was trying to solve a mathematical word problem!
If I were to have an emergency, my funds would go down the toilet. I worried about what I was doing with my hard-earned cash and wanted to start budgeting more purposefully. Thus prompted the following google searches: how to budget, budgeting 101, budgeting basics, how to budget when you’re basic (jk), and keywords of the like.
The 50/15/5 Guide
With your next paycheck do the following:
1) 50% goes to essential expenses
- Essential includes food, debt, bills, car payment, and other basic needs
2) 15% goes to retirement savings
- Contributing pre-tax into a 401k or 403b will lower your taxable income
- Invest in your workplace retirement plan as soon as possible, even if it’s a small percentage
3) 5% goes to short term savings
- Use this for your future vacation or save it for emergencies
There’s so much more to talk about within these 3 points, but more on that later.
Think about your previous paychecks. Have you been hitting the marks according to the 50/15/5 Guide? If so, that’s awesome for you! I never purposefully allocated my money until my finances started struggling. Don’t let this happen to you!
- Think about your upcoming paycheck. How can you make this guide work for you or make it even better for your lifestyle?
- Share your thoughts and experiences with your budgeting in the comments!