Harvard bankruptcy expert Elizabeth Warren and Special Advisor for the Consumer Financial Protection Bureau under President Obama - coined the 50/30/20 budget guideline in the book she co-authored together with her daughter, "All Your Worth: The Ultimate Lifetime Money Plan."
The 50/30/20 budget is broken down into three categories:
Needs - Fixed Costs: 50%
Wants - Flexible Spending :30%
Savings/debt payoff - Financial Goals: 20%
Please note: This budget is for a persons after-tax net income. Medical and 401K retirement accounts are PRE-TAX expenses and are not included in this budget.
Needs: 50%
Housing 20%
Car/Transportation 10%
Utilities (including cable, phone and internet)10%
Food 10%
Wants :30%
Tithes and Offerings 10%
Recreation 10%
Personal 5%
Clothing 5%
Savings: 20%
Emergency Fund 10%
Savings Roth IRA 5%
Debt 5%
Here is the 50/30/20 Breakdown for $3,750 Monthly Income:
Savings Roth IRA $187
Debt $187
Tithes and Offerings 10%
Recreation 10%
Personal 5%
Clothing 5%
Savings: 20%
Emergency Fund 10%
Savings Roth IRA 5%
Debt 5%
Here is the 50/30/20 Breakdown for $3,750 Monthly Income:
Needs:$1,875
Emergency Fund $375
Housing $750
Car/Transportation $375
Utilities (including cable, phone and internet)$375
Food $375
Wants:$1,125
Tithes and Offerings $375
Recreation $375
Personal $187
Clothing $187
Savings:$750Savings Roth IRA $187
Debt $187
Just a side note, it bugs me to see cable, a complete want under "needs". Otherwise I do agree with this as a start.
ReplyDeleteYes, I actually don't need cable, but it comes with the internet package, which I need for work and play.
ReplyDelete