Create a Spending and Saving Plan: The 80/20 Strategy
It takes guts to take charge of your money situation and we know you can do it. Let’s get to work.
How many of us have a budget?
Check this out: we ALL have a budget. Yup, it’s true. We all HAVE a budget; we might not know what it is, but we have one. Money comes in and money goes out – that cash flow IS our budget. You are already spending your money and you are probably spending it on the things you need AND some of the things you want.
The question is, are you happy with the amount you are saving? Not really? We think you might be happier if you decide on a specific amount to save BEFORE spending. Let’s try the 80/20 spending and saving plan.
80/20 Spending and Saving Plan
Divide your income like this:
- 80% for living expenses (rent, debt, food, clothing, gasoline)
- 20% for savings (you can break down your savings by categories)
- 10% for long term goals (retirement/work optional lifestyle)
- 5% for emergencies (you know about this, right?)
- 5% for specific short term goals (vacations, major purchases)
With this Budget Builder, you can see how your monthly spending compares to recommended estimates in your area.
Remember, you are the boss. Some of us have to spend 90% on living expenses. That’s okay, you’ll just need to adjust your saving amount. The bottom line here is that YOU are in control. Give every dollar you earn a “job.”
For more about the 80/20 rule and making your money work for you, check out this video.