Budgeting 101: How to Budget Money

How to budget money

• Calculate your monthly income, pick a budgeting method and monitor your progress.

• Try the 50/30/20 rule as a simple budgeting framework.

• Allow up to 50% of your income for needs.

• Leave 30% of your income for wants.

• Commit 20% of your income to savings and debt repayment.

Try a simple budgeting plan: We recommend the popular 50/30/20 budget to maximize your money. In it, you spend roughly 50% of your after-tax dollars on necessities, no more than 30% on wants, and at least 20% on savings and debt repayment.

We like the simplicity of this plan. Over the long term, someone who follows these guidelines will have manageable debt, room to indulge occasionally, and savings to pay irregular or unexpected expenses and retire comfortably.