![]() One simple way of keeping track of your money is through percentage budgeting. We can’t say it enough times: Don’t spend more than what you earn! And the best way to do that is to keep track of what you spend. ![]() So, how do you do it? What can you sacrifice and what do you spend on? Here I break down budgeting in the easiest way for you, and show you how you can benefit from it: The 50/30/20 budgeting method We can’t have it all – buying our first home and shopping every weekend, something’s got to give. Perhaps, we should do some self-reflection and look at our finances to figure out how we can cut and trim to match our current cost of living. But the disparity between income and cost of living is not that great that it is impossible to survive. I mean, sure, cost of living has skyrocketed and income is trying to catch up, albeit in snail-pace. But if I may be brutally honest, I believe the biggest problem we have is the lack of financial planning. Our millennials survey found that the biggest concern most Malaysians have when it comes to their finances is the high cost of living. These stories, though heart-wrenching, can be frustrating to hear. It is also not unheard of for Malaysians who are just clueless as to what happened to their salary by the second week of the month. What you do with the remaining 30% of your income is left up to you.On a daily basis we hear from our readers and users about how they need to get more loans because their income is insufficient for them to survive after repaying all their existing debts. ![]() The 50/15/5 rule is when you divide your after-tax income into categories - 50% goes to essential expenses, 15% goes to retirement savings and 5% goes to short-term savings.To use the 50/30/20 rule on a weekly basis, calculate your weekly after-tax income and put 50% towards needs, 30% towards wants and 20% towards savings.In this case, 75% is allocated to needs, 15% to wants and 10% to savings. The 75/15/10 rule uses the same methods as the 50/30/20 rule, however, it breaks down the percentages differently.This example uses a take-home pay of $4,000. And savings expenses include deposit accounts or savings for retirement. Wants include nonessential expenses like dining out and travel. Needs include essential expenses like rent or mortgage, utilities and food. The 50/30/20 rule is when you divide your after-tax income between the categories of needs, wants and savings.What is the 50/30/20 rule with an example?.Here are some answers to frequently asked questions about the 50/30/20 budgeting rule. To use this budget successfully, you would need to work on increasing your monthly income so you can create room in your budget for wants and savings. You need to have enough money left over to put toward the savings and spending categories. ![]() Doesn’t work for: People who can barely make ends meet with their current income or who are in between jobs won’t find that the 50/30/20 budget works very well.If you find yourself overspending on nonessentials like shopping trips, expensive dinners, the latest electronics and other luxury items, you might find that the 50/30/20 budget is a good solution. Best for: People who have enough income left over to budget elsewhere after paying for their basic needs like rent and utilities.Keep in mind that you can always tweak the percentages for the spending and savings categories to better meet your financial picture. As long as you do, this budget can help you meet your needs and savings goals, with money left over to spend as you like. Whether the 50/30/20 budget is right for you depends on whether you have income left over after you budget for your basic life necessities.
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