When managing your finances, having a budget is important for ensuring you are not spending too much. The 50 30 20 budget template can get you started on the right track.
The most difficult part of having a budget is trying to stick to it, but it is possible if you are determined to cut your costs.
If you are new to budgeting, it can be difficult to know where to start. Formulating a good template for your budget is important, but where should you begin? The 50-30-20 budget works very well for people, but what is it and how can you implement it into your spending?
This article will explain more about the 50-30-20 budget template so you can see how it can fit into your lifestyle. You can find out more below to begin implementing this budget template into your life today (You might want to check out What Is A Flexible Budget)!
What Does The 50-30-20 Budget Mean?
If you have never heard of the 50-30-20 budget, you may not understand what it refers to.
The budget is called 50-30-20 because of how your finances are split when you use this method, but what does it mean?
When you implement the 50-30-20 budget system into your finances, it looks something like this;
50% of your salary goes towards mandatory expenses like housing costs, groceries, and loans.
30% of your salary goes on personal expenses like eating out, traveling, and subscriptions.
20% of your salary goes into savings accounts.
Once you have split up your salary into these categories, you can easily keep track of your spending.
You may find that you have money left over once the month is up, which means that you can decide what to do with it.
You can either spend the leftover money how you want or even put it in your savings; it is up to you!
50 30 20 Budget Template
To see if the budget works for you, you can use a 50-30-20 budget template to keep track of your finances.
You will first calculate what 50%, 30%, and 20% of your salary are so that you know what you are working with.
Put the amounts in separate columns and write what they are above them to make sure that you do not confuse them.
In the columns, write lists of all the things that you need that fall into the categories. In the 50% column, write mortgage/rent, groceries, phone bills, car loans, petrol, credit cards, utilities, and any other mandatory expenses that you need to pay.
Next, add the total monthly amounts for each of these expenses in the column next to them.
Do the same with the 30% column and write expenses like eating out, subscriptions, traveling, and any other leisure expenses that you enjoy. Write the amount that they cost in the next column.
Do the same with the 20% column, and add the amount of monthly savings in the column. This can be split into retirement, investments, and general savings.
Next, at the bottom of each column, add up how much all of the expenses total. Write the total of the 50% expenses at the bottom of the column, and write the 30% and the 20% expenses at the bottom of their columns.
You will then be able to see if you have money left over in any of the categories or if you are just making ends meet.
Can The Budget Be Flexible?
Once you have calculated how much each of the costs of your expenses, you may find that you are short of money in the 50% column.
This means you can transfer money from your 30% or 20% column and contribute it towards your 50% expenses.
The main point of this budget isn’t to be overly strict and go without food or be unable to pay your bills; it is to keep track of your spending.
You may find that the 30% column for leisure activities has money left over, which you can contribute towards either the 50% column or the 20% column.
You can use your money however you want to ensure that your finances are covered monthly.
Monthly Budget Example
An example of how to break up the budget into the 50-30-20 budget is if you are getting paid $1,200 a month.
If your partner is also getting paid $1,200 a month and you live in the same household, your total monthly income is $2,400.
You can then look at splitting your salaries into the 50-30-20 budget.
This would mean that 50% of your income would be $1,200, which will be spent on mandatory expenses.
Your leisure activities would take 30% of your income, which would be $720, and your savings would take 20% of your income, which would be $480.
From this, you can see how much your salary covers your monthly expenses.
If you do not need $720 a month for leisure activities, you can take a portion of that and transfer it to your savings or your mandatory expense budget.
It is up to you how you split the costs, but the 50-30-20 budget template is a tool that allows you to keep track of your finances and ensure that your expenses are paid each month.
Final Thoughts
To conclude, the 50-30-20 budget template is very popular as it allows people to keep track of their finances.
They can see how much of their monthly salaries are going towards their mandatory expenses, leisure activities, and savings while making sure that they are not struggling in any category.
If you find that you have money left over in one category but are going short in another, you can transfer money over to that budget every month.
This will help ensure that all your monthly expenses are being paid and that you are keeping track of your finances.
As a current Mortgage Underwriter with 15 years of experience, I have seen my fair share of money-related issues. Whether that be high levels of debt, not enough credit, or simply a lack of funds - I’ve had clients who fit into these categories.
Here I will share tips, tricks, and experiences on how you can get yourself back in control of your finances.
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