Most people think you need to have a high income in order to do fantastic things (like travel), own property, have options in life.
I’ve known many high earners who fritter everything away, and many lower income peeps who own lots of properties and every year do great things.
I believe the key is to have concrete goals and have them written down, and then to be very clever with your money. It is essential to know how much money you have coming in, exactly what your debt burden is, and to have a very specific budget that you stick to fastidiously. For me the budget is easy to stick to when I have a concrete goal that I am working towards. Without that carrot on a stick I tend to fall off the budget or at least get side tracked.
Today I am reworking all of the above. The goals for the year ahead, the debt burden and the budget. One of the easier ways to format your money plan for 2017 is to use the 50-20-30 rule. I found a fantastic post about it on CareerGirlDaily.com I’m re-posting it here today.
With the 50/20/30 method you will be able to budget your money. Whether you’re in college, have a full time job or have just started to earn money: the great thing about this rule is that it applies to every budget and helps you gain control of your money.
50 – “Your needs”
First and foremost about 50% of your paycheck goes to the essential things you need in your life. Your “needs” are things like your rent, your car, your public transport card, utilities and groceries. These are payments that don’t vary much and things you know you have to pay every single month, whether you want to or not.
20 – “Your savings”
This one sounds hard but 20% of your income each month should go directly into savings. The money you save will be beneficial for your retirement contributions or to pay off debts you might have like college or car loans. Put the money in a different bank account, so you don’t even think about spending it on anything else.
30 – “Your wants”
Now for the fun part! 30% of your monthly payment can be used for the things you love to do and the things you “want” in your life. As long as you’ve taken care of the first two steps, this one is completely up to you. You can spend it on your hobbies, eating out, shopping or your monthly Netflix subscription. It can be tempting to spend more than 30% on your “wants” but try to honest and strict with yourself and don’t even start to cheat.