What is the 50 30 20 rule?

The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings .

Does the 50 30 20 rule still work?

Customize according to your situation For many people, the 50/30/20 rule works extremely well —it provides significant room in your budget for discretionary spending while setting aside income to pay down debt and save. But the exact breakdown between “needs,” “wants” and savings may not be ideal for everyone.

When should you not use the 50 30 20 rule?

The 50/30/20 has worked for some people — especially in past years when the cost of living was lower — but it's especially unfeasible for low-income Americans and people who live in expensive cities like San Francisco or New York. There, it's next to impossible to find a rent or mortgage at half your take-home salary.

How to organize monthly income?

50/30/20 rule: One popular rule of thumb for building a budget is the 50/30/20 budget rule, which states that you should allocate 50 percent of your income toward needs, 30 percent toward wants and 20 percent for savings . How you allocate spending within these categories is up to you.

How do you declutter in a hurry?

This technique involves working in short, focused bursts of time, typically 25 minutes, followed by a short break . Set a timer for 25 minutes and declutter as much as you can during that time – whether it's a clutter bucket or a kitchen drawer. When the timer goes off, take a 5-minute break, then repeat the process.

How do you brutally declutter?

Decluttering involves being brutally honest with yourself and creating a complete decluttering mindset . Relating your stuff to bigger picture topics including finances, consumer habits, and also breaking the cycle of binge-shopping and purging can help you rid your cluttered tendencies and start living better — today.

What is your biggest financial goal?

The biggest long-term financial goal for most people is saving enough money to retire . The common rule of thumb is that you should save 10% to 15% of every paycheck in a tax-advantaged retirement account like a 401(k) or 403(b), if you have access to one, or a traditional IRA or Roth IRA.

What are the 5 basics of personal finance?

There's plenty to learn about personal financial topics, but breaking them down can help simplify things. To start expanding your financial literacy, consider these five areas: budgeting, building and improving credit, saving, borrowing and repaying debt, and investing .

What is a 50/30/20 budget example?

Applying the 50/30/20 rule would give them a monthly budget of: 50% for mandatory expenses = $2,500 . 20% to savings and debt repayment = $1,000 . 30% for wants and discretionary spending = $1,500 .

What is the 40 40 20 budget rule?

The 40/40/20 rule comes in during the saving phase of his wealth creation formula. Cardone says that from your gross income, 40% should be set aside for taxes, 40% should be saved, and you should live off of the remaining 20% .

What is the 50 30 20 rule of budgeting examples?

For example, if you earn ₹ 1 lakh, you can allocate ₹ 50,000 to your needs, ₹ 30,000 to your wants and ₹ 20,000 to your savings, every month .

Why is the 50/30/20 rule good?

One question we hear a lot when it comes to budgeting is, “Why can't I save more?” The 50/30/20 rule is a great way to solve that age-old riddle and build more structure into your spending habits. It can make it easier to reach your financial goals, whether you're saving up for a rainy day or working to pay off debt.

Tested Ways to Easily Declutter Your Finances

If there’s one thing I’ve learned over the years it’s that learning to declutter your finances, home and relationships are key to preventing stress and enjoying life.

However, when it comes to decluttering and simplifying finances, it’s always been a struggle for me to stay consistent. There are times I do so well I’m downright proud of myself. But… I also find it insanely easy to slip back into old habits in this area. Once I learned to simplify a few key areas things began to change.

Suffice it to say that I am no expert when it comes to all things financial. Nevertheless, I have learned a few tricks that keep me on track in my quest to fully declutter and simplify finances in my life.

Here are 11 things that will help you easily declutter your finances and put greater control back in your hands.

This post may contain affiliate links, which means I may receive a small commission if you purchase something mentioned in this post. See more details here.

1. Get Rid of as Much Paperwork as You Can

I’ve said it before, and I’ll say it again, paper is evil! The more paper you have lying around the easier it is to get overwhelmed and lose track of important information.

Having multiple accounts for various financial pursuits is guaranteed to lead to piles of paper.

To declutter your finances get rid of any paperwork that isn’t absolutely necessary. The easiest way to do this is to shift account statements and notifications online.

Also, sign up for autopay where you can. I remember our previous car insurance would send the bill literally a day or two before it was due. I’m certain it was on purpose to get all those late fees. I switched insurance companies and went to autopay. Since doing this, I never need to worry about car insurance being paid on time.

With auto-pay, bills are never late. As an added bonus, not having bills arrive in the mail removes that typical anxiety that comes with each new bill.

For those bills that I can’t put on autopay when the bill arrives I put the due date into mycalendar so don’t forget. I use the Living Well Planner which I love. This planner makes it so easy to simplify finances with its monthly budgeting sheets. It allows me to keep track of everything all in one place.

You can get all the details on the Living Well Planner here.

2. Limit the Number of Credit Cards You Use

In today’s day and age, it’s pretty easy to build up an impressive array of credit cards. Every store you walk into and even Amazon offers some large discount or cash incentive to sign up for their store card.

The truth is owning as many credit cards as you can is really a problem just waiting to happen.

If you need to, keep them open for credit scoring purposes, but focus your credit card use on one or two cards. I’ve found that using two cards is the best way to simplify and declutter your finances.

3. Become Debt Free

Alright, this may not be easy, but it is the number one thing you can do to declutter your finances.

Debt is the opposite of simplicity. Debt makes life more complicated and stressful. Not only do you have to spend more time paying bills, but multiple debts are serious sources of stress. The bottom line is, each debt that you eliminate takes out one complication in your life.

Yes, it’s a process and will take time. However, you can begin to make a plan today!! Trust me, having a workable plan in place will go along way towards simplifying and decluttering your finances.

Here is the one word of caution I’m going to give you. This comes from personal experience. Try not to set a strict date by which you aim to get out of debt.

The reason is simple, life has a way of throwing curveballs at us. When this happens it’s easy to get frustrated because you fell off track. This causes unnecessary added stress every time you think about it.

It’s much simpler to work toward paying off that debt without the pressure of an arbitrary timeline. All that really matters is that you are 100% committed to getting rid of your debt one step at a time.

I’m a big fan of Dave Ramsey’s debt snowball plan for paying off debt. You can read more about how that works here.

4. Pay Cash Whenever Possible

More and more we are becoming a cashless society. But paying with cash has a lot of benefits when it comes to decluttering your finances.

When you commit to paying with cash you are far less likely to overspend. This will, of course, help you stick to your budget and get that debt paid off.

There are some great articles on how to use a cash envelope system to simplify your finances. One of my favorite articles that explains getting started with paying cash for your expenses is this Quick Start Guide To The Cash Envelope System from Thrifty Little Mom.

5. Cut Out Any Services You Don’t Need or Regularly Use

For years we paid for cable without watching the vast majority of what was available. By cutting out the cable and switching to Netflix we saved so much money. Do you have a gym membership hardly use? What about magazine subscriptions?

Eliminating any services you don’t need is an easy way to declutter your finances. If nothing else, you remove yet another payment from your budget. The fewer payments you need to make, the more you are able to simplify and declutter your finances.

6. Create a Spending Plan

Something about the word budget conjures up feelings of anxiety, suffering, and even depression. I read an article that says our brain responds to the word budget in the same way it responds to the word diet.

7. Automate Your Savings

No matter how much you plan, the unexpected happens. Having an emergency fund in place allows you to declutter your finances by avoiding credit cards and debt when these unplanned events come up.

During these times saving is often difficult because it turns into just one more thing you have to do. But when you automate savings, you don’t even have to think about it. It happens automatically!

When you know that you’re putting money aside each month you increase your financial security and declutter your finances by having one less thing to think about.

8. Stop Buying Stuff

Here’s a simple truth: spending isn’t saving if you don’t really need it. When you buy things you don’t need, you do a lot more than just waste money. You waste valuable time in maintaining items you don’t need. This creates unnecessary clutter and stress in your life.

To truly simplify and declutter your finances stop buying things you don’t need.

The bottom line is the less stuff you have, the less time you’ll spend maintaining, cleaning, and organizing. Plus, when you stop spending you have more money and time for what matters most.

If this is an area you struggle in, check out this post on How To Stop Buying Things You Don’t Need.

9. Declutter Your Physical Possessions

There has been a lot of research on the effect clutter has on your life. Clutter complicates life and increases your stress.

A huge part of simplifying your financial life is to eliminate your physical clutter.

Clutter often makes it impossible to find things or even realize what you have. When you can’t find something, you go out and purchase it, only to realize later, that you already owned it.

In addition, having too much stuff can lead to unnecessary late fees. Overdue fines for library books and DVD rentals happen because we misplace them. When your desk is cluttered, you forget to pay a bill that is buried amongst the clutter. The result is that you have now accrued late fees.

I have many posts on how to declutter your home. A good place to start is the Ultimate Guide To a Clutter-Free Home.

To declutter your finances, make sure to declutter and simplify your home.

10. Take Care of Your Stuff

Now that you’ve decluttered all the stuff you don’t need, take care of what you do have to simplify your financial life.

You see, everything you own costs money, if you take care of it, it will last longer and cost you less in the long run.

By maintaining your stuff and keeping it in good condition, you will be content with what you have. This will help you avoid buying more stuff.

Taking care of your stuff is an easy way to declutter your finances.

11. PlanOut Your Meals

Regular meal planning has been a vital step to keeping a handle on our finances.I promise you this simple habit is one of the best things you can do to declutter your finances.

Since I began regular meal planning I have decreased the number of groceries I buy and the amount of food we waste. Plus we eat so much healthier.

There is no way around it, eating out is expensive. And if 5:00 pm rolls around and you have no idea what you’re going to make for dinner, eating out will be your go-to. If you find yourself doing this on even a semi-regular basis start meal planning.

Honestly, meal planning does not have to be complicated or time-consuming. I spend maybe 10 to 15 minutes a week meal planning. If you want to see how I’ve simplified meal planning click here.

If meal planning is not your thing, consider a meal planning service, you will still save money. My favorite meal planning service is $5Meals. At only $5, it is totally affordable, and costs a lot less than eating out!

Decluttering your finances is one of the best things you can do to ensure your life is full of what matters most.All it takes is implementing a few key habits. Why not start today!

Tested Ways to Easily Declutter Your Finances - It's My Favorite Day (2024)