Budgeting is never easy, but keeping track of your money can be especially difficult when you’re supporting loved ones abroad (click here to check the latest exchange rates). One of the easiest ways to keep spending aligned with your savings goals is to follow the 50/30/20 budgeting rule.
The 50/30/20 rule suggests 50% of your income goes toward needs and essentials, 30% toward wants, and 20% toward savings. Here’s how to create a 50/30/20 budget that works.
Step 1: Determine your monthly income after taxes.
Step 2: Budget 50% of your income for essential needs.
Calculate how much you spend on essential needs like: housing, utilities, food, transportation, and health care expenses. The amount that you spend on these necessities should total no more than half your monthly income.
Step 3: Limit your “wants” to 30% of your income.
Add up your expenses on things like entertainment and leisure over the course of a month. If you find your “wants” to be over 30% of your income, start looking for expenses you could live without. The fewer costs you have in this category, the more money you’ll have for saving and sending to friends and family abroad.
Step 4: Dedicate 20% of your income toward savings and supporting loved ones. Once you’ve taken care of your wants and needs, set aside 20% of your monthly pay to save for your future or help loved ones in other countries. You can also use this money to build an emergency fund, invest for retirement, pay off debt from student loans or help friends and family with international bills.
Following the 50/30/20 rule is an easy way to reach your savings goals. Once you’re in the habit of saving, you might find it easier to support your friends and family abroad. Check the latest exchange rates here.