Everyone should Start with a 50/30/20 Budget Method
Having a Budget is like the foundation for the best personal finance you can have. Budget is a simple and easy way to track your costs and keep tabs on your spending so that you can make informed decisions about where to allocate your money. It also helps you stay disciplined when it comes to sticking to budgeted restrictions, which can help improve both your financial situation and overall well-being.
In Simple terms, a budget is a plan for spending and saving money and this is a must-have for everyone who follows personal finance. A budget allows you to see all of your expenses in one place — from groceries, utilities, transportation costs, entertainment purchases, etc. — and analyze them according to category (e.g., food & beverage; housing; healthcare) or by month/year. This transparency makes it easier for you to monitor progress and adjusts plans accordingly should there be any changes in budget projections.
Creating a budget can be an extremely helpful way to manage your finances and stay on track. By creating a budget, you are able to plan for future expenses and live within your means. Additionally, budgets help you to track your spending so that you can better understand where money is going and make adjustments as needed. Newbies might find it hard, but trust me creating a budget is very simple and thus following it. If you are a newbie you can start with the 50/30/20 budgeting method and thus in 3–6 months' time, you will be a pro in budgeting.
The 50/30/20 rule states that 50% of income should be used for needs (expenses like bills, rent etc), 30% for wants (eating out, movies etc.)and 20% for savings (mainly investment).
For example, if someone has $100 as income, he will divide $50 for needs, $30 for wants and $20 for savings.
This budgeting method is the best for beginners because it is quite easy to follow and helps you stay disciplined. This also gives you a sense of control over one’s financial situation which can be empowering. So whether you’re just starting out or want to refine the way that you’re managing your money now, creating a 50/30/20 budget is definitely an effective strategy!
