Daily expenses, entertainment, life events, and long-term goals all compete for the same dollar. You stretch your money in many directions. Consider making trade-offs by moving money around from other categories.Stop spending in that category if possible, until you get your next paycheck.It's important to list all items and subtract the amount you spend in each category, so you know where your money is going. Next, divide your monthly income among the categories and then pay your bills/save accordingly. Add a "miscellaneous/unexpected" and a "savings" category, as well. Use a spreadsheet, an online service or, if you prefer to go "low tech," a notebook and pen will work just fine.įirst, create columns for your spending categories (e.g., groceries, gas, utilities, medical, entertainment, and child care). Tracking Opens PDF takes the most time, but it provides the greatest insight into your spending habits. You can adjust the 50/30/20 rule based on your short- and long-term goals, but be careful about confusing "nice-to-haves" for "necessities." Several dinners out each week and unlimited data plans may be nice to have, but they aren't essential. 20% (or more, if possible) goes toward savings and paying down debt.30% (or less) goes to nice-to-haves, such as entertainment, hobbies, and travel.These are expenses you have to pay every month. 50% (or less) goes to necessities such as housing, student loans, and utilities.It involves dividing your monthly income into three "buckets": Another budgeting technique is the 50/30/20 rule.
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