Budgeting 101

A friend of mine recently asked me what I know about budgeting, so I did a little research and here's some of what I came up with.

An article in Forbes, called "New To Budgeting? Why You Should Try The 50-20-30 Rule" offers some ideas on how to divide up your income every month.

What is the 50-20-30 Rule?

The 50-20-30 Rule helps you build a budget by using three spending categories:

• 50% of your income should go to living expenses and essentials. This includes your rent, utilities, and things like groceries and transportation for work.
• 20% of your income should go to financial goals, meaning your savings, investments, and debt-reduction payments (if you have debt, such as credit card payments).
• 30% of your income should be used for flexible spending. This is everything you buy that you want but don’t necessarily need (like money spent on movies and travel).

Keep in mind that the percentages for essentials and flexible spending are the maximum you should spend. Falling under those guidelines can leave more money for other financial goals.

Although it may be better to track your actual expenses first and then see what you really spend instead of trying to jam your expenses into unreasonable percentages.

You can keep track of your expenses in several ways, such as pen and paper or via an app. The app I currently use is called Pennies and is available on iOS...I'm not sure about Android. Another app, that was highly rated is called Mint. I actually used Mint several years ago but I stopped using it...I think it might be a good idea to try it again! I just re-downloaded it onto my phone...it's available for iOS and Android...check out the article for links.

Mint does connect to your checking account, as well as other accounts such as your 401k and credit cards; and it will automatically put many of your transactions into the proper categories...such as $7.90 for In-N-Out Burgers is listed under Fast Food, so I would recommend using Mint to start your budgeting endeavors. It's also available online at www.mint.com

And then maybe see if you can move your expenses toward the 50-20-30 Rule.

Interesting days

Today - A Room Of One's Own Day, Opposite Day and Irish Coffee Day

Tomorrow - Spouse's Day, Australia Day and Peanut Brittle Day

February will be Bird-Feeding Month, Library Lovers' Month, North American Inclusion Month, Heart Month, Hot Breakfast Month, Bake For Family Fun Month and Cherry Month

Next Wednesday - Decorating With Candy Day, Baked Alaska Day, Car Insurance Day and Serpent Day  

February 25 - World Sword Swallower's Day, Open That Bottle Night, Chocolate-Covered Peanuts Day and Clam Chowder Day