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Creating a Home Budget: Your Key to Financial Success

Nearly all basic home budgets are based on the 50/30/20 rule. According to this rule, your total monthly take-home income is divided into three parts. Read on to know!
Creating a Home Budget: Your Key to Financial Success
According to the 50/30/20 rule, your total (income of all earning members) monthly take-home income is divided into three parts: 50% is set aside for needs, 30% for wants, and 20% for savings and debt repayment.

A home budget is a plan. It records the income and expenses to set a budget for a household. It’s not just for couples; even roommates or anyone who share costs at home can have a home budget.

Nearly all basic home budgets are based on the 50/30/20 rule. According to this rule, your total (income of all earning members) monthly take-home income is divided into three parts where 50% is set aside for needs, 30% for wants, and 20% for savings and debt repayment.

Find the Result

Now that you know what the 50/30/20 rule is, you can find out your exact value for each category based on your income. Don’t forget to add the total combined take-home income of all earning members.

Find What is Happening Right Now

Now calculate your current spending, and then compare it with the result you got from 50/30/20. Don’t forget to include everything, even the ones that are not obvious. You can also check bills or bank statements to be sure. 

Use the Tools

You can use a spreadsheet to do the calculations. You can also download budget spreadsheet templates that are found on the internet and tweak them for your household and add categories. These templates would make everything easier and also act as a guide because they might have categories you didn’t think of. There are also budget apps that can be used by a single person, a couple, or an entire family.

Adjust  

Once you know how much money is in each of the 50/30/20 categories, you can make adjustments to maximize the savings category. 

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Richard Samuel

E Richard Samuel loves learning. From finding out the newest food in town to traveling and writing, he loves learning about everything. When he’s not writing, he’s probably trying to master the piano or watching food reviews.

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This page is purely informational. Beem does not provide financial, legal or accounting advice. This article has been prepared for informational purposes only. It is not intended to provide financial, legal or accounting advice and should not be relied on for the same. Please consult your own financial, legal and accounting advisors before engaging in any transactions.

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