March 5, 2015

50-20-30 Spending Plan

The 50-20-30 budget (I prefer “spending plan”) divides your after-tax dollars into three buckets. The first 50% is for necessities, including shelter, food, utilities, transportation, clothing, etc. The next 20% goes to long-term savings and extra payments on any debt. This bucket includes contributions to your retirement. If you have a car loan, paying the minimum payment is considered a necessity. But if you make extra payments on that debt, that goes into the 20% bucket. This bucket does not include short-term savings, like a vacation. That’s for the third bucket (30%) which is for lifestyle choices such as “vacations, entertainment, gym fees, hobbies, pets, eating out, cell-phone plans and cable packages. These are things you do not have to have to get by, but are lifestyle choices.” Read more about spending plans by Rob Berger at

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