This Spending Plan May Be the Perfect Fit For You. Here's How It Works.

• Don't worry if the word budget evokes thoughts of no-frills, ramen noodle dinners, and nights at home because there are spending plans that can fit your lifestyle.
• There are no fast and concrete rules for how you should budget or track your money.
• When creating a budget, it's a must to adjust your money mindset.

If the word budget evokes thoughts of no-frills, ramen noodle dinners, and nights at home, don't worry. I have found an easy way to help you grow your bank account without losing your cool. My goal here is to adjust your mindset when it comes to your money plan, spending habits, along with setting you up with a system that allows you to see how, where, and when you spend your hard-earned cash.

I don't have a traditional budget, but I do track my monthly expenses while ensuring that I save consistently and spend purposefully. Unfortunately, there are no fast and concrete rules for how you should budget or track your money. There are plenty of budgeting methods that you can try, like the 50/30/20 budget rule and the zero-based budget. However, but there is a general system you can consider to help you with your money goals. It's the 20/50/20/10 guideline.

How the 20/50/20/10 Guideline Works

• 20% goes toward savings. Remember to pay yourself first and save consistently.
• 50 % goes toward essential expenses. No more than half of your pay should go toward your necessary expenses, including housing, transportation, utilities, and groceries.
• 20% goes toward debt repayment.
• 10% goes toward FUN. Your fun category can include gym fees, hobbies, personal care, eating out at restaurants, and other miscellaneous expenses.



Pay Yourself First

David Bach, the author of the Automatic Millionaire, said that we need to pay ourselves first. I took this message to heart and every month started saving money in a separate savings account. After I paid myself first, I would then begin to pay for my essential expenses.

Paying yourself first will allow you to save money for large purchases, your emergency fund, and retirement. When you put money in your savings account, you are building up a nest egg that will assist you in the long run. In addition, you will feel financially secure and stable with savings in your account. If you don't have a savings account, you can feel financial anxiety, leading to an economic downfall like overspending on unnecessary items.

What Are the Essential Expenses?

Accounting for your expenses will help you to budget better. It's a must to budget your costs because it gives you an overall picture of what needs to go into your budget and what you should take away. Those essential expenses can include:

• Rent/Mortgage
• Groceries
• Utilities
• Insurance
• Transportation
• Child care

Debt Pay-off Process

Paying off debt can seem like an overwhelming task. However, once you start the process, you feel more financially free. To start the debt pay-off process, use 20% of your after-tax income to pay down your debt. It is hard paying back debt, but trust me, the sooner your debt is eliminated, the sooner you can reroute the additional funds toward savings, building an emergency fund, upgrading your home, or whatever else you may choose.

FUN as Part of Your Budget

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Every budget should allocate money toward doing the things you enjoy and having FUN! We must balance between saving our coins, paying down debt, and having fun!

A spending plan can be the perfect way to balance your money, promote financial wellness, and build your financial confidence.

This article was previously posted on the Bacon & Heels website. Edits were made for CapWay's posting.

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