How much money do we have left once things like state, local, and income taxes, Medicare, and Social Security are deducted? To use the 50:30:20 budgeting rule effectively, we need to get the amount of our after-tax income. There are pesky things called taxes that are taken out of our paychecks before we get them. ![]() Get Your NumberĪs we all know, the amount of money we earnis not the amount of money we end up with. ![]() So let’s break down how to use this easy rule that will simplify your budget and your life. That book is widely credited with popularizing the 50:30:20 rule of budgeting.Īnd it’s a good rule because it’s so simple and works for everyone because it uses percentages rather than dollar amounts. She has also authored a number of books including several on matters of personal finance including “ All Your Worth: The Ultimate Lifetime Money Plan” which she wrote with her daughter Amelia Warren Tyagi. Senator Warren was a Harvard law professor and is a leading authority on bankruptcy. Since it’s creation, the CFPB has returned more than $12 billion to consumers who were victims of unfair practices by those entities. The CFPB was created to protect consumers from abusive, deceptive, and unfair practices by mortgage and payday lenders, credit reporting agencies, debt collectors, and private companies that provide student loans. But did you know she is the person who originally proposed the Consumer Financial Protection Bureau? You know who Elizabeth Warren is, a Senator from Massachusettes. So log into Mint, You Need a Budget, or Personal Capital, or get out your spreadsheet, cocktail napkin, abacus or whatever you use to budget and let’s set up your budget categories with the 50:30:20 rule. We’ll also include a few ways to increase your income because sometimes you can’t reduce your expenses any further. Instead, we’ll show you how to set up your budget categories with the 50:30:20 rule.Īnd because we are a one-stop-shop for all things personal finance, we’ll show you ways to reduce your expenses within those categories if your numbers are outside of the 50:30:20 parameters. We can’t give you hard numbers because everyone’s income and expenses are different. So, do we all agree that everyone needs a budget?īut the question is, how do you divide up the money? How much should you be putting it towards things like housing, utilities, car payments, debt repayment, entertainment, and retirement? ![]() If you don’t know exactly how much money you have coming in and going out and where it’s going, it will be nearly impossible to reach your financial goals. It’s basically Rule #1 when it comes to personal finance. You already know that you have to have a budget.
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