A budget can help you manage your spending and saving.
A budget is a monthly plan that helps you limit your spending on some types of expenses. In
addition to controlling your spending, a budget can help you make sure that you’re setting aside
enough money for savings each month.
One popular rule of thumb is to follow the 50/20/30 recommended ratio for your budget.
With this rule, you dedicate 50% of your take-home pay to essentials, such as food, housing,
and medical expenses. You set aside 20% of your income for financial goals, such as savings,
retirement, and paying off debt. And the remaining 30% of your income you’re free to use for
flexible spending, such as for shopping, vacations, and eating out.
After you’ve made your budget, try to find where else you can cut back. For example, spending
$3 a day on lattes adds up to $1,095 per year. And spending $2 a day on bottled water adds up
to $730 per year. By contrast, making coffee at home or drinking tap water is basically free.
Following a budget can help you:
● See where your money goes
● Limit your spending
● Save more
● And fund your big-picture goals