What is a budget? A budget is a plan for every dollar you have. An estimate of income and expenditure for a set period. Any budget must cover all your needs, some of your wants and savings for emergencies and the future. We will be covering the 50/30/20 budget, one of many effective budgeting techniques that you can employ. This budget allows you to simply divide your income among needs, wants, savings and debt repayment. 50/30/20 refers to the percentage of your taxable income that should be allocated for your needs, wants, and savings. Allow up to 50% of your income for needs. That should be things like groceries, housing, basic utilities, transportation, insurance, and minimum loan payments. Perhaps your necessities fall under the 50% cap, that leaves you more to work with elsewhere. If your absolute essentials overshoot the 50% mark, you may need to dip into the 30% (wants) portion of your budget for a while. Leave 30% of your income for wants; that is things like dinners out, gifts, travel, and entertainment. The final, 20%, of your income should be put towards savings and debt repayment. In terms of what to start saving for, your priority should be a starter emergency fund. We suggest you start by building up to an emergency fund of at least $500 (enough to cover small emergencies and repairs), and you can then build from there.
-Isaiah Simpson
Educated Spending 