Use an App and Follow the 50/20/30 Rule

Document created by mrsmags on May 19, 2016Last modified by amara.mastronardi@socialedgeconsulting.com on Dec 5, 2016
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I grew up with a dad that valued savings, frugal spending, and financial literacy. While I've learned most of my tips and trick from him, two I have learned on my own and swear by them: (1) find a budgeting app that you enjoy and use it consistently, and (2) follow the 50/20/30 rule.


Download a Budgeting App

Personally, I use the GoodBudget app (it's free!). You can use this on your phone, tablet, or even your computer, so there isn't an excuse for not entering in your information. You plug in your salary and can allocate money for up to 10 categories. Then, whenever you make a purchase, you go into that category, enter in where you shopped and what amount of money you spent, and it is subtracted. I have tried other apps (i.e. Mint) and for me, it didn't help me to spend less because I wasn't physical required to enter in what I was spending. I need to be reminded of how much I am spending and this does it for me, but find whatever works for you and stick to it!


Follow the 50/20/30 Rule

If you are someone that craves structure and organization, this tip will be perfect for you! The 50/20/30 rule is a way to categorize what you spend your money on, but it also helps you to prioritize important things, like savings. 50% of your budget (max) should be for bills, things you spend money on consistently from month to month. This could include electricity or car payments, rent/mortgages,  monthly subscriptions, or gym memberships. 20% of your budget (at least) should be set aside for savings. This could be for your retirement, personal savings, or maybe you want to save up to travel somewhere nice. 30% of your budget is allocated for more flexible spending. This would include groceries (as it varies each time you go), gas bills, eating out, or maybe a personal allowance.


This isn't a hard and fast rule and you could have different percentages depending upon what your goals are and ultimately, how much money you have coming in. But it's a good starting point. Below is how I allocate my money, and I actually include groceries and gas in my 50% category because I just allocate a certain amount for the money and I don't allow myself to go over.


54% BILLS

  • Car insurance: 175.75
  • Groceries: 550.00
  • Church: 100.00
  • Gas: 75.00

 

31% SAVINGS

  • ROTH: 167.58
  • House Down-Payment: 100.00
  • Personal Savings: 100.00
  • Travel: 150.00

 

15% FLEXIBLE

  • Eating out: 50.00
  • Allowance: 200.00

 

This specific set-up is just a guide and won't work for someone that is single, as I split bills with my husband. It is just an example and something to work from!

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