![]() ![]() Pascarella says that the 70-20-10 budget is primarily for people who are just starting to budget because of its simplicity. How to know if the 70-20-10 budget is right for you A 2018 Pew Research Center study found that 14% of adults living in someone else's house are a parent of the household head. This can also mean supporting your parents through their retirement. This encompasses donations to charities or causes that you believe in or donations to houses of worship or alma maters. The donation aspect of the 70-20-10 budgeting rule is what makes this guideline unique, as most budgeting guidelines don't have donations explicitly included in the budget. On the other hand, minimum payments usually fall within your monthly expenses, like credit card debt payments or car loan payments. When it comes to debt, this category is for debt that isn't immediately due, like making extra payments on student loans or medical debt. The final 10% of your budget goes toward paying down debt or donating money. Dedicate the remaining 10% for debt repayment or donations Note: Building your emergency fund can be especially helpful in reducing debt that you'd need to pay with the remaining 10% of your budget. ![]() Keep in mind that you may already be saving pre-tax income in retirement vehicles such as a 401(k) match, in which case you may not need to save as much of the income that reaches your bank account. This budget can be a great tool for figuring out how much you should save each month. Not only does this guarantee you'll have money when you need it, but you'll have more income overall. You can put your income towards an emergency fund if you don't already have one, or take advantage of compound interest through a high-yield checking account. The 70-20-10 budget has you putting 20% of your income away into investments or savings. Set aside 20% for savings and investments Because there is no line separating your needs from your wants, it might be helpful to figure out what percent of your spending is fixed, such as rent or utilities, and work out what percent of your spending money is still available. Unlike most budgets, which separate your cost of living and discretionary spending into two different categories, the 70-20-10 budget condenses both into one category. Use 70% of your income on wants and needs ![]()
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