A huge obstacle you will encounter when you start to manage your money is learning how to properly write a budget. After filing for bankruptcy, you would want to know how to keep better track of your spending in order to make better financial decisions.
The 50/30/20 rule for budgeting is a great place to begin. This rule provides a financial plan for managing your income and developing a strategy which will help you handle your current expenses and plan for the future.
The following is a breakdown of the 50/30/20 rule for budgeting:
- 50% = Living Expenses – What this means is that no more than half of the income which you will make each month should be dedicated to regular living expenses, such as your house payment, rent, groceries, and your bills. However, if your bills start pushing you past the 50% mark, look for ways you can cut some spending.
- 20% = Financial Management – This portion of your income is dedicated to handling your financial matters. The first and most important part of financial management is paying off your debt, such as credit cards, cars, or even putting money down on a mortgage. Next, you want to find ways to save for retirement, invest your money in growing your income, and set aside money for emergency situations. In addition, you can use this money to save for living expenses, such as college tuition or a wedding.
- 30% = Lifestyle Choices – Whether it's for eating out, vacations, or your cable bill, what is left of your income after you take care of your living expenses and manage your financial future is yours to spend as you like.
To find out more methods that will help you save money, contact Bruce W. White, P.C. and schedule your consultation today.