The 2 most popular and simple budgets are the 50/30/20 rule and a zero-based budget. They both offer lots of wiggle room for you to still enjoy some of the finer things in life, while also investing in your future.

Let’s break them down 💪

50/30/20 Budget 💸

The 50/30 budget rule is pretty simple - you divide up your after tax income into wants, needs, and goals.

50% To Your Needs 🏠

Simply put, needs are expenses that you just can’t avoid—payments for all the essentials that would be difficult to live without. Some examples are housing, electricity, phone bill, water, healthcare, etc.

30% To Your Wants 🛍️

The middle spending category goes to “wants” — things that might make life better, but that you don’t necessarily need to pay for each month. Some examples are a gym membership, restaurants/take-out, entertainment, etc.

20% To Your Goals 💰

Finally, the last 20% of your income should go to your personal future goals. Whether that be paying off debt, saving for retirement, investing, or saving for a home, etc.

An Example:

Let’s say that you bring home $4,000 dollars a month. Here’s what the 50/30/20 budget might look like for you:

Needs: $4,000  x .5 = $2,000

• $1,400 for rent + utilities
• $350 for groceries
• $100 for gas
• $150 for wifi and phone

Wants: $4,000 x .3 = $1,200

• $400 for restaurants and take-out
• $350 for shopping
• $200 for entertainment (Spotify, Netflix, etc. )
• $200 for vacation savings
• $50 for miscellaneous

Savings/Debt: $4,000 x .2 = $800

• $400 to highest-interest debt
• $250 into retirement
• $100 into emergency savings
• $50 into investments

Zero-Based Budget 👌

The goal of a zero-based budget is to give every penny a purpose. You take your income and minus all of your costs to get to zero by the end of the month. Sounds pretty simple, right?

You can repeat expense categories and amounts each month, or switch it up based on the goals you’re trying to hit. If you come in under budget each month, add it to your emergency fund or move it to another category for next month.

An Example:

Put the Plan Into Action 🏃

The best way to start using either of these budgets is to first take a look at your after-tax income. Once you have that number, check and see how your existing spending habits stack up and where you would like for them to be. (pro-tip: if you aren’t currently tracking your spending, log into your bank account dashboard and see if you can pull up a breakdown of your spending categories)!

After planning how much you expect to spend in each category, tracking it in an app that works for you can help you better visualize your spending and savings and stay on track (some of our personal faves are YNAB, TrueBill, and Mint).

Your budget can’t be perfect on the first try! Make sure to re-evaluate month after month to create the system that works for you 🙌

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