The word “Budget” might prompt an image of a belt tightening around your money, but a more comfortably tailored fit is possible with the 50/30/20 rule designed by Elizabeth Warren, United States Senator and co-author of the 2005 New Your Times bestseller “All Your Worth: The Ultimate Lifetime Money Plan.”
We agree that a crucial part of implementing the rule is to honestly evaluate your “needs” such as housing, health insurance, medication, groceries, and utilities, and to separate them from your “wants”. It may require some minor inconveniences or scaling back, but try to limit needs to 50 percent of after-tax income and your “wants” to 30 percent. Another key piece of the 50/30/20 method relates to putting 20 percent of your after-tax income into an emergency fund, retirement account, or paying off debt.
If this feels especially daunting, don’t do it alone! With determination, persistence, and guidance from a knowledgeable Financial Advisor, you can achieve financial freedom and peace of mind.