Tuesday, August 31, 2010

A Different Way to Look at Your Budget

I receive a daily email from a Daily Worth.  They provide helpful finance tips and information.  Most of the emails I don't get a lot out of but some are very informative and interesting.  The most recent talked about a new way of looking at budgeting for your household.  It's called "The Balanced Money Formula" (from the book, "All Your Worth" by Elizabeth Warren and Amelia Tyagi)  It says to allocate your after-tax money as follows...
  • Spend no more than 50% on NEEDS, such as housing, transportation, groceries, insurance, your basic wardrobe.  The key being to keep this budget being to keep spending NEEDS as low as possible.
  • Spend at least 20% on SAVINGS, which should include retirement and debt repayment.
  • The rest, around 30%, can be spent on WANTS like cable TV, dining out, concert ticket, extra shoes and clothes, supplies for hobbies, etc.
So keep this in mind the next time you are looking at your budget or trying to figure out how to better budget your money.  It seems like a fairly easy and straigtht forward plan to follow!

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