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Good news: You can create a budget<\/a> without giving up all the things you love. In fact, it’s those ultra-strict budgets that often result in people giving up on budgeting altogether. “If a budget doesn’t allow for any fun, it becomes a burden,” Omoth says.<\/p>\n\n\n\n One way to learn how to start a budget and take the burden out of budgeting is with the 50-20-30 rule, a favorite among financial experts and budgeting beginners.<\/p>\n\n\n\n Use this guide to start a budget with the 50-20-30 rule:<\/p>\n\n\n\n The 50-20-30 rule works by breaking your spending into three key categories. Forget line items for dozens of different expenses. You don’t have to stress about having a specific budget for “clothing” or “entertainment,” for example. As long as all of your discretionary spending falls within the amount you’ve allotted, you’re solidly on budget.<\/p>\n\n\n\n When you start a budget with the 50-20-30 rule, your three budget categories will look like this:<\/p>\n\n\n\n “The beauty of the 50-20-30 rule is that it sets you free more than restricts you,” Omoth says. “Yes, you’re putting aside 50 percent of income for necessities and another 20 percent for financial goals, but it leaves you a healthy 30 percent of your income to use as discretionary money. It’s fun money<\/a>, if you will.”<\/p>\n\n\n\n <\/p>\n\n\n\n Yoni Dayan, editor-in-chief at a personal finance blog, favors the 50-20-30 rule for those just learning how to start a budget. “The 50-20-30 rule is a fantastic way to think about budgeting,” Dayan says. “It’s simple, generous and, most importantly, realistic.”<\/p>\n\n\n\n As with any kind of budget, the key to start budgeting with the 50-20-30 rule is to have a clear picture of your current finances. You need to know how much money you bring in each month, which means looking at your paycheck and factoring in any additional income streams (side gig<\/a>, anyone?). If you’re self-employed or your monthly income is variable, you can work from an average monthly figure\u2014simply take your income from last year and divide it by 12. When you budget with the 50-20-30 rule, keep in mind that you need to focus on your after-tax<\/em> income, which is what’s left of your paycheck after taxes have been taken out.<\/p>\n\n\n\n To start a budget with the 50-20-30 rule, you’ll then need to account for your monthly expenses. Take a look at your bank and credit card statements for the last three to four months. Track every cent you spent, whether it was on rent, your gym membership or your favorite treat-yourself item. You can do this manually with a pen and paper, use a spreadsheet or leverage a budgeting and spending app<\/a>. By looking at your expenses for previous months, you’ll have an idea of what you spend on a regular monthly basis.<\/p>\n\n\n<\/div>\n\n\n \u201cThe 50-20-30 rule is a fantastic way to think about budgeting. It’s simple, generous and, most importantly, realistic.”<\/p>\n How does the 50-20-30 rule work?<\/h2>\n\n\n\n
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<\/figure>\n\n\n\nHow do I start budgeting with the 50-20-30 rule?<\/h2>\n\n\n\n
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