Budgeting isn’t always easy. It can be particularly difficult for people who are adjusting to a lower income, as well as for those who are new to the concept of efficiently managing their money. By applying the 50/30/20 rule correctly, you will find it easier to live within your means while saving for a home for sale in Irvine. So, what is the 50/30/20 rule?
50 percent of your income should be budgeted for essentials.
Bear in mind that this is not a fixed amount, but rather a maximum. If you spend less than 50 percent of your income on living expenses, that leaves more resources for the next step.
20 percent of your income should be budgeted toward financial goals.
This includes long-term investments, such as savings accounts, as well as payments made toward accumulated debts. If you have money from other steps left over at the end of the month, allocating it here would be a wise decision.
30 percent of your income may be given over to discretionary spending.
This covers elective purchases and expenses, things that you don’t necessarily need but would like to have (like cable, gym memberships, etc.). By covering your expenses with the first step of this plan, you may spend this portion of your income guilt-free. If you wind up with cash left over, add it to your savings, or your debt repayment. Or, you can carry it over to the following month.
By following the 50/30/20 plan, you can enjoy putting a substantial percentage of your income towards hobbies, vacations, and other entertainment pursuits, while ensuring that you maintain a lifestyle that is comfortably within your means.
When you’re ready to put your savings to use and find a house or condo for sale in Irvine, let us help. We take the time to understand each client’s budget, needs, wants, and personal style so we can find them their dream home without breaking the bank. Give us a call at (714) 454-6304 and speak with a real estate agent today!