Learning how to budget your finances is the first step to gaining control of your money and creating wealth. Although the manner in which you budget your money is unique to your need and income, there is a general blueprint that can guide our budget process. The 50/30/20 rule simplifies by the process by breaking it into three categories rather than breaking it into multiple categories that are difficult to follow.
The 50/30/20 rule applies to fixed costs, financial goals and flexible spending respectively. Fifty percent of your income should go into paying bills such as rent, gas and food. Cutting on costs is the most effective way of making savings. Thirty percent of your income should go into making payments or contributions that will secure your financial foundation. Automating your savings contributions and debt payments will not only help you to save consistently, but will also ensure you don’t fall back on payments.