![]() ![]() "It suggests you live on 50% of your income - housing, transportation, cell phone, utilities - enjoy 30% with dining out, recreation, or travel, and save and invest 20%." Here are a few of the options you might consider: 50/30/20 ruleĪccording to Christensen, the 50/30/20 rule has become increasingly popular in the last 20 years. There are several strategies for doing this, each with its own pros and cons. The next step is to create your budget - a specific plan for how you'll use your earnings each month and eventually achieve your financial goals. Work together in the budgeting process so you're both informed and on board. Quick tip: If you have a spouse or partner sharing financial responsibilities with you in the household, you'll need to know their monthly income and expenses as well. If your income outweighs your expenses, though, that means you have extra cash to put in savings or toward some other financial goal you might have. ![]() "If your expected expenses are greater than your expected income, you will need to earn additional income, cut out some purchases, go into debt, or do a combination of these three," says Todd Christensen, an accredited financial counselor and education manager at Money Fit. If you have debts (credit cards, car loans, etc.), add these in as well. Once you have your income estimated, you'll also need to estimate your monthly expenses - things like your rent or mortgage, utility costs, groceries, insurance, and gas. If you're unsure what your net income (your income after taxes) looks like off the top of your head, you can typically use pay stubs or bank statements to get these numbers. To start budgeting, you first need a good pulse on your monthly income - more specifically, how much you take home each after taxes. Here's how to get started with your budget: 1. "It's actually the first step in putting yourself in control of your finances because it means you know where your money goes each month." "Building a budget doesn't have to be overly complicated or time-consuming," says Brittany Castro, in-house certified financial planner for Mint. How to budget your moneyīudgeting is critical if you want to stay on top of bills, pay off debts, or save for the future, and there are several ways to go about it. ![]() Without one, there's a chance you could run out of money before your next pay date. In short: Budgets allow you to get the most out of your paycheck. Show Pros, Cons, and More chevron down icon An icon in the shape of an angle pointing down. ![]()
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