Having a budget is the foundation of an incredible personal finance journey. Everyone out there who knows a little bit about personal finance knows about the Budget. There are many budgeting methods in the market, and everyone follows one or the other. But if a newcomer comes and finds the information about the budget he will be overwhelmed with so many options and thus he might choose some complex ones and will think that budgeting is a very complex process.
The budget is very simple to follow if you follow the basic ones like the 50-30-20 Budget methods. That's why every beginner in personal finance should start with it and try to set up a budget for 3-6 months, when you are successful in doing that then you you can try to get involved in more complex ones.
What is the 50-30-20 rule, it states that 50% of your in-hand income should be used for needs, 30% should be used for wants and then the rest 20% should be used for savings. Need are like the expense you need for survival which includes bills, rent, student fees and other things. You have to take that 50% of your income and use only that for your needs. 30% is for wants which are not essential but you want that to do like eating out at a restaurant, movies and entertainment. And the rest 20% goes to savings.
For example, if someone has $100 as income, he will divide $50 for needs, $30 for wants and $20 for savings. This is a very simple method to follow which has everything in it like needs, wants and savings. Now it is not that you have to stick to it by numbers, you can interchange based on your priority like 40% for needs, 20% for wants and the rest 40% for savings and any combination. But make sure you do not make your savings less than 20%.
Do you follow budgeting?
