How to manage your house budget

Money Management Tips To Improve Your Finances

What is the 50/30/20 Rule?

The 50/30/20 budget rule is intended to help individuals to manage their after income. These 50/30/20 rule is an easy way budgeting method that can help you to manage your money effectively, easily and sustainably.
This rule will help you regularly by keeping your expenses balanced and you can plan your budget to work more efficiently. And by these three categories 50/30/20 you can save your time and stress of digging in the details every time you spend the money. Every time we think that, ”Why can’t I save the money’’?
So this is the great way to manage your budget and will definitely make easier to reach your financial goals, whether you are saving up for the rainy days or saving to pay off the debt.

WHO INVENTED THIS RULE 50/30/20
In 2005 the book, ’’ALL YOUR WORTH: THE ULTIMATE LIFE TIME MONEY PLAN’’, written by US Senator Elizabeth Warren and Amelia Warren Tyagi originated the rule 50/30/20.
Elizabeth Warren and Amelia Tyagi, after 20 years of research concluded that you don’t need a complicated budget to get your finances in check. All you need to do is to balance your money across your needs, wants and saving goals by using the 50/30/20 rule.

HOW TO BUDGET YOUR MONEY

you may be wondering, what this rule is? So let us know what it actually meant. This is all about understanding and budgeting in a simplest way and it will not take hours out of your day. The rule 50/30/20 is a straight forward monthly budgeting method that tells you exactly how much to put towards your saving and your living expenses each month. By following this rule you can confidently avoid overspending and build up your saving overtime
The 50/30/20 rule simplifies budget by dividing your after tax income into just three categories: needs, wants and savings and debts. It will make easier for you to  stick to your budget and help keep your spending in check. Now let us budget our income according to this 50/30/20 rule,

Spend 50%  of your income on Needs

So needs are define as basically something that would  greatly inconvenience and something that you literally cannot live without. Needs are the expenses that you can’t avoid. 50% of your after-tax income should cover your most necessary costs and payments for all the essentials that would be difficult to live without.
Needs may include:

 •Monthly rent
 •Basic groceries
 •Electric and gas bills
 •Transportations
 •Health Insurance
 •Other loan payments
If you find that your needs extended much more  than 50%  of your take home income, you may be able to make some changes to bring those expenses a little bit down. This could be very simple as swapping to a different energy provider, or finding some new ways to save money while grocery shopping or by living a less expensive life situation.

Spend 30% of your income on Wants

 This is where most of the people run into the difference between ‘Wants and Needs’.  A Want is something that may causes a minor inconvenience in your life. It is not actually necessarily a Need but Want is something that you can easily drop out such as.
 •Dining out
 •Branded shopping
 •Vacations
 •Gym membership
 •Entertainment subscriptions (Netflix, HBO, Amazon Prime)
 •Groceries (other than essentials).
I think dining  out is a big one for lots of people for whatever reason, their lifestyles are so busy that they simply jump into the car and go grab something to eat or just dial the food app and order something at home rather than preparing the food themselves. Then comes entertainment that definitely comes under Want because it is not necessary to live. So a Want is something that you don’t necessarily need it but it improves the quality of your life greatly. This 50/30/20 rule doesn’t mean not to enjoy your life. It simply means being more conscious about your money by finding areas in your budget where you are needlessly overspending. If you are confused between Want and Need, simply ask yourself, ’’Could I live without this?’’ If your answer is yes, that is probably a Want.

20% Savings

We know that lots of this sounds basic ,but until you actually write it down and understand where all your money is going to, it’s like your Want easily creep into that Needs category to where they are both overflowing and you are in debt ever month. So knowing about debt, now let us talk about Savings, the remaining 20% of your income consistently putting aside each month can help you build a better, more durable saving plans. Whether your ultimate goal is building emergency funds, developing a long term personal retirement plan or even preparing for a down payment on a house.
So unless and unless it is not a Want or a Need then you should definitely put it under this Saving or debt category and it’s impressive how quickly the savings can add up. Suppose If your income is 2000 dollars after tax each month, then you could put 400 dollars towards your savings. In just a year ,you will save close to 5000 dollars.