What is the 60 20 20 method?
If you have a large amount of debt that you need to pay off, you can modify your percentage-based budget and follow the 60/20/20 rule. Put 60% of your income towards your needs (including debts), 20% towards your wants, and 20% towards your savings.
A very simple model really. I believe people should be working 60% of their time in their business, 20% of their time on their business, and 20% of their time on themselves. When I say time, I mean the total amount of time you assign to work, not the total amount of time in a week.
According to the 60/20/20 budget, you should allot 60% (or $2,400) to your monthly living expenses, 20% (or $800) to savings and then 20% (another $800) to your personal wants. It's not much different than the 50/-30/-20 budget, but it puts more of a focus on fixed expenses and savings than personal wants and spending.
Those will become part of your budget. The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals. Let's take a closer look at each category.
First, track all your essential expenses. The aim is to keep these under 60% of your net income. Tools like budgeting apps or spreadsheets can be handy. This category is where most people need to be cautious to avoid overspending.
This 20% slice of your income pie is for your future. This is why the 60/20/20 rule is especially good if you're keen to focus on long-term savings. This slice goes directly into your savings account, retirement fund, or maybe even into investments.
The 70-20-10 budget formula divides your after-tax income into three buckets: 70% for living expenses, 20% for savings and debt, and 10% for additional savings and donations. By allocating your available income into these three distinct categories, you can better manage your money on a daily basis.
That means each number in the rule stands for a portion of your income: 60% of income goes to expenses. 20% of income goes to savings. 20% of income goes to wants.
When following the 10-10-80 rule, you take your income and divide it into three parts: 10% goes into your savings, and the other 10% is given away, either as charitable donations or to help others. The remaining 80% is yours to live on, and you can spend it on bills, groceries, Netflix subscriptions, etc.
For many people, the 50/30/20 rule works extremely well—it provides significant room in your budget for discretionary spending while setting aside income to pay down debt and save. But the exact breakdown between “needs,” “wants” and savings may not be ideal for everyone.
What is the easiest budget method?
1. The zero-based budget. The concept of a zero-based budgeting method is simple: Income minus expenses equals zero. This budgeting method is best for people who have a set income each month or can reasonably estimate their monthly income.
The 50/30/20 rule is an easy budgeting method that can help you to manage your money effectively, simply and sustainably. The basic rule of thumb is to divide your monthly after-tax income into three spending categories: 50% for needs, 30% for wants and 20% for savings or paying off debt.
Budget 20% for savings
In the 50/30/20 rule, the remaining 20% of your after-tax income should go toward your savings, which is used for heftier long-term goals. You can save for things you want or need, and you might use more than one savings account.
If you make $70K a year, you can likely afford a home between $290,000 and $310,000*. Depending on your personal finances, that's a monthly house payment between $2,000 and $2,500. Keep in mind that figure will include your monthly mortgage payment, taxes, and insurance.
35% / 45% rule
Essentially, this housing payment rule says your housing payment shouldn't be more than 35% of your gross income or more than 45% of your net income after you pay taxes.
To live “comfortably” as a single person in 99 of the largest U.S. metro areas, you'll need a median income of $93,933, according to a recent SmartAsset analysis.
By age 50, you'll want to have around six times your salary saved. If you're behind on saving in your 40s and 50s, aim to pay down your debt to free up funds each month. Also, be sure to take advantage of retirement plans and high-interest savings accounts.
Fidelity's guideline: Aim to save at least 1x your salary by 30, 3x by 40, 6x by 50, 8x by 60, and 10x by 67. Factors that will impact your personal savings goal include the age you plan to retire and the lifestyle you hope to have in retirement. If you're behind, don't fret.
“With this rule, you should be spending 50% on essential expenses — rent [or] mortgage, insurance, minimum debt payments, etc. — 30% on discretionary expenses — dining out, entertainment, etc. — and 20% towards your goals — retirement, emergency funds, investing, etc.,” she said.
If the 50/30/20 budget was once considered the golden standard of budgeting, it's not anymore. But there are budgeting methods out there that can help you reach your financial goals.
What is the 40 40 20 budget rule?
The 40/40/20 rule comes in during the saving phase of his wealth creation formula. Cardone says that from your gross income, 40% should be set aside for taxes, 40% should be saved, and you should live off of the remaining 20%.
Calculating your target budget
If you make $3000 a month after taxes, then 50% ($1500) would go toward needs, the next 30% ($900) goes toward your wants or discretionary spending, and the remaining 20% ($600) goes toward your savings.
Improving waste segregation and compliance by aiming for a 20-20-60 waste split – 20% incineration (yellow bag) waste, 20% infectious (orange bag) and 60% offensive waste.
YOUR BUDGET
The 80/20 budget is a simpler version of it. Using the 80/20 budgeting method, 80% of your income goes toward monthly expenses and spending, while the other 20% goes toward savings and investments. Of course, the 80/20 budget rule won't work for everyone.
At least 20% of your income should go towards savings. Meanwhile, another 50% (maximum) should go toward necessities, while 30% goes toward discretionary items. This is called the 50/30/20 rule of thumb, and it provides a quick and easy way for you to budget your money.
