50 30 20 Budget Spreadsheet – It is one of the most common money management strategies in the world and has helped many people maintain healthy financial habits. What is it and how to adopt it? FP tells you.
We have always said that there are no basic formulas or magic recipes for a person to become a millionaire overnight, but what is basic is to consider their finances and the management of their money as a really important issue of which should take over
Between that, the budget, knowing when to spend and when not, how to save and how to invest, are the fundamental pillars for those people who really have the purpose of having more economic stability because they know that money is not an end to reach, but a means to achieve other types of personal purposes.
But going back to step 1, budget preparation is the time when many people can stay stagnant there, without really considering what to do and how to do it or, worse, not having the will to take on this habit that becomes the base of a millionaire.
That is why, among the many strategies we have discussed, the 50/20/30 rule can become the most appropriate strategy for you and your lifestyle. According to Money Ning, what this allows is to divide your finances into three major categories:
50 30 20 Budget Spreadsheet
Fixed costs (50%)
What this rule establishes is that of your salary, if you want to be calm and have economic stability, you should not spend more than 50%. This is that if he receives $ 1’500,000 of salary, he will not look for a place to live on a lease that costs him $ 1 million. It is the basic norm.
Here you should be and make a calculation of everything that represents your “survival” and that does not vary from month to month: the payment of the house or rent, long-term credits (vehicle or student), public services, food and transportation . Perhaps some people can include some expenses that, eliminating them, can not imply that their quality of life diminishes.
Yes, you have to do accounts, nothing to do. Mathematics is the basis of some things, but it does not mean that it should be complicated by logarithms or equations, simply addition and subtraction, it is not more.
Financial objectives (20%)
Where do you want to go? Think about it, either because you want a house or because you want to make a trip to South America, you should consider that 20% of your salary should be estimated for this. Let’s clarify, it does not have to be a single objective, for example, you can consider including in this category the exit of the debt of your credit card.
You can also consider savings for your future or for the construction of your emergency fund. For many this amount may be too high, but remember that savings and financial planning is what really allows you to realize your dreams without having to resort to debt or any type of credit in which you will always end up paying more than what they really lend him.
Flexible expenses (30%)
Finally, in the last part of this budget rule, it is established that 30% of what you get for salary can be used for everything that is called “variable expenses” that can include situations such as food (if it is from those who love go out to eat), as well as gas, shopping or outings with your friends or partner.
This is what allows you to really maintain your lifestyle and the “gusticos” that you can afford without feeling any remorse for it; because it was something that was already estimated in your budget.
A daily example …
Juan recently graduated as a systems engineer. He managed to get a good job in which he was given a contract with a monthly salary of $ 1,300,000 (net). He has pending credit with Icetex, lives with his parents, but helps with services and must pay all social benefits (which were already discounted).
Then, according to the rule, Juan should estimate:
Essential expenses (50%)
Transportation: $ 80,000
Food: $ 200,000
Help at home: $ 350,000
So in total you are spending $ 630,000, which means 49% of your total income
Financial priorities (20%)
Icetex: $ 200,000
Travel savings: $ 60,000
So in total you are spending $ 260,000, which means 30% of your total income.
Flexible expenses (30%)
You have the option to spend $ 390,000 to your liking, so you may be able to go on a rumba with your friends outside of the city next weekend, but you can also buy that cap you loved. Or, being more judicious, give a bigger contribution to your debts.
Also read “The 25 plans to do without spending any money”.
With this, it is much easier for you to order all your finances and be able to remove the pressure of not spending more than you should, while understanding the importance of financial priorities which must answer yes or yes. But if he had much higher flexible expenses, his situation would be different and Juan’s dream of traveling the world at 35 may not come true.
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