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50 • 30 • 20 •
One form of a budget looks like the 50-30-20 method. This process is an easy way to organize your finances into your needs, wants, and savings (goals). Don’t worry, if you are still wondering how to distinguish between a need and a want, we will get there too!
The 50, 30, 20 method:
50% of your money towards needs
30% of your money towards your wants
20% of your money towards your savings
Remember, your needs are expenses you need to fill no matter what! Wants are things you can live without, but enjoy indulging in from time to time. If you are in high school or college, it is likely that you have fewer “needs” you have to tend to. It does not have to be a perfect 50/30! Find whatever balance works for you.
The third category of your budget goes towards the future. It is important not to spend all of your money at once, so saving each month is critical. Building up your money for future goals like travel, or moving out is a good idea, even if the thought may feel far away right now.