With every new beginning, many find they have the opportunity to re-evaluate how they spend their money. A new year, new job, new business and other turns in life can bring you to a new home and a great chance to start using your money more efficiently.
You yourself decide what to do with your money, and there are many budgets and guidelines to follow to make the most of it. Whatever your situation, a good way to control how much you spend is to follow a budget you’re comfortable with. One good budget that many can follow easily while renting a home is the 50/20/30 budget. Essentially is just an easy budget that breaks down many different categories of spending into three main categories. These categories are: Fixed Costs, Financial Goals, and Flexible Spending.
These are your monthly bills that don’t drastically change from month to month. This includes rent, car payments, utilities, subscriptions and memberships. The costs that you’ve committed to pay every month for an extended period of time. Fixed costs will always be a certain amount you expect to spend every month and represent the “50” part of the 50/20/30 budget. This suggests you should avoid spending more than 50% of your monthly earnings on fixed costs.
Financial goals are different for everyone’s financial situation. If you’ve just started a business, or paying off loans, and debts, or saving up for a holiday, This part represents the “20” of 50/20/30 budget. This means you should try to spend up to 20% of your monthly earnings for paying of debts or saving up for future expenses. A good way to ensure you are saving a certain amount per month, then set up automatic payments in your bank account.
Flexible spending is all your miscellaneous purchases and daily spendings including groceries, going out, entertainment, gas and hobbies. This represents the last 30% of your monthly earnings. For those who like to spend their money, splurge, and impulse buy, it’s a good idea to check and see exactly how much flexible spending you have per month. One quick way is to simply subtract your fixed costs and financial goals from your monthly earnings.
Again this is just a general rule to follow, if you want to save more you can alter the percentages of your flexible spending, just as long as you’re not allocating your money too much or too little into one category over others. The idea is to be consistent and diligent. Eventually it will all add up and you can manage what you spend to reduce stress and enjoy your new home a little more knowing you’re financially covered.