Savings and Budgets, Savings and Budgets

What is really the hardest thing about budgeting? I mean a budget can be freeing! It allows us to live stress free. We know where our money is going, what expenses are due for the month, and how much we have left to spend. One of the hardest things for me is categorizing my expenses, which I have really been struggling with over the past couple of months. I don’t want to limit myself in spending money on brunch with friends this month if that is what I feel like doing, and I don’t want to limit myself in those extra spin classes after I regret that cinnamon roll at brunch the following month.

So, I’m trying something different. I’ve decided to go minimalist on my budget. Three categories: essentials, fun money and savings. Each of these have a different percentage of income designated towards it. Ever heard of the 50/20/30 rule? This rule states that 50% of your income goes towards essentials: housing, utilities, groceries, transportation, and the things you need to live. In my case, I’m designating 60% of my income towards this category.  Next, the 20% is savings, the goal is to save at least 20% of my income whether it be putting it into a 401K or an emergency savings account. In my case, I’ve increased this number to 25% for the time being, putting 19% into 401K and investment funds and the other 6% in my emergency and vacation funds. Finally, that 30% is your discretionary income, or in my case my fun money. I’ve actually reduced this number to 15% as savings is my main goal right now.  Things that will be included are the internet bill, Netflix, cell phone, dining out, gym memberships etc. See how internet and my phone bill are in this category? Not an essential to live.

There you have it, every single dollar has a purpose. So far, I have tremendously increased my savings and I hope that this pushes it even further. With less restrictions, I’m able to have that Avocado Toast or go to that extra spin class and not feel guilty about my spending. More updates to come on how this solution will work for me! But, I’m excited to give it a try!