Do you want to be better with your money but have no idea what your first step should be? Experts say the secret to financial stability is simply keeping a budget. So, here’s one popular budget economists recommend called the 50-30-20.
How does it work? First, add up your monthly income after taxes. Like your salary and any other money coming in, including freelance gigs, or cash from stuff you sell on eBay. The total amount is your budget.
Then, here’s where the 50-30-20 part comes in.
First: 50-percent goes toward basic necessities. Financial experts say this is where a lot of people have budget slip-ups. Because they think things like pricey cable TV are a necessity. But experts say necessities only include things you literally can’t live without like rent, utilities, and food.
The next step: Set aside 30 percent of your budget toward “wants.” Those are things that are nice, but not absolutely essential. Like your cable bill and the occasional dinner out.
And finally, set aside 20 percent of your money in an emergency savings fund.
Studies show it’s easier to save money if you deposit it directly into a savings account as soon as you get it. Also, that money can accrue interest, so you'll grow your savings.
And that’s the 50-30-20 budget.