How to Successfully Maintain Your Budget
By Shamia Khan
The 50-30-20 Budget rule
The 50-30-20 budget rule is a simple and effective plan that can help people reach their financial goals. The rule is a template that is intended to help people manage their money and save for the future and emergencies.
The rule states that 50% of your money should be spent on needs that are necessary for survival. This includes things like rent, mortgage, payments, insurance, healthcare, debt payment, and utilities. Some ways to minimize spending for necessary things is by downsizing your lifestyle to a smaller house, car, or by taking public transportation to work.
The 30% of this rule suggests that you should put this percent of money towards things that you want. These fall in the category of nonessential things but you may choose to spend a little extra on things that will make you happy. For instance, some people choose to use the 30% on movies, dinners, vacations, tickets, sporting events and the latest electronics.
You should aim to allocate 20% of your net income on savings and investments. This includes putting money aside for emergencies. You should aim to have 3 months worth of savings in your emergency fund in case an unforeseen event occurs. You should also aim to save money for retirement and pay off any current debts that you may have. This rule is very helpful for beginners who want to save money or are on a budget to achieve their financial goals.
Saying “No” While on a Budget
People often have the habit of saying “yes” to things even if they are on a budget because they are afraid of missing out on an experience or disappointing the other person. We feel obligated to say “yes” for many things because we aren’t sure how to effectively communicate “no” to the other person. The list below describes several ways that you can turn down an offer which is important to know.
One way to say “no” if you are on a budget is by taking a moment to assess your options and declining the offer. You can also explain your financial situation to the person or suggest other activities that don’t require you to spend a lot of money. This is helpful because if the other person is aware of your situation, they will understand and might be open to doing something else. Another tip that you can use is by suggesting to split the cost of the activity, this would be helpful if you are going out to dinner or buying tickets to an event. Lastly, you should remember that you are not obligated to say “yes” all the time and by effectively communicating “no”, you can maintain your spendings which will help you reach your long term financial goals.