Thats when a budgeting method that focuses on just two buckets comes in handy.
The solution is that you allocate60% of your budget to your essential and fixed expenses.
The other 40% goes toward everything else.
But consider those sub-categories the 201-level budgeting class.
Were down here at 101 level looking to get the basics right.
This hypothetical person makes $50,000 per year before federal taxes and does not pay state income tax.
They do not make any pre-tax contributions to a 401(k) or other benefit account.
Their healthcare premiums are covered by their employer.
At first glance, its looking pretty good, right?
Except theyre over-budget, with the percentage buckets adding up to 101% instead of that magic 100%.
Time for some finagling.
By trying to cut expenses first, weve got some extra money to spend.
This is where you might realize that budgeting frees up your finances, instead of holding them back.
Theres $141 to spare each month, and this person is already saving a lot.
And you know, while were at it, can we add pet care to the essentials?
Luckily this is our budget and we can do whatever the heck we want.
Check out that fine budget!
Lets do one more check to take this a step further.
Jenkins says the fun stuff should take up no more than 10% of your 40% bucket.
But consider the entire situation here.
The numbers look pretty good to me.
What do you think?
Do you like this budgeting method better than the 50/20/30 method?
