What one person spends isn’t the same as what another person spends. We each have our own idea of what’s acceptable for necessities such as food and shelter, and extras including clothing and nights out. That’s why budgeting is so important, no matter your priorities.
If you’re new to budgeting or want to laser in on your spending, there are a couple of key considerations and ways to approach it. For starters, think in terms of the 50/30/20 rule: half your take home pay for fixed expenses, one-third for flexible, day-to-day items, and 20 percent for financial goals such as debt repayment or retirement plans.
While those general categories are workable for a range of income levels and approaches, you can also create your own custom budget, built specifically for the goals you have. Maybe you want to pay down debt super-fast, or maybe you want to retire early. Then this is the approach for you.
What other ways can you approach budgeting? This budget guide for every income offers some ideas.