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A budget takes the fun out of money.
- Mason Cooley
Some financial advisors use the 50-30-20 Rule for a household budgeting its after-tax income: budget 50% for necessities (including housing), 30% for luxuries, and 20% for paying of debt or saving for the future.
Before exploring your own household's budget, start by practicing with a pretend budget.
The Speck family's record of their income and expenses is listed on the spreadsheet below (which is also a Google Sheet).
Most of their expenses are the same from month to month. Their home has about $3,000 of property tax due each November, which they budget for by saving throughout the year. However, garbage pickup is billed quarterly. In March they receive some anniversary money from family. In April they need to fly to a wedding, and income tax is due.
First look at how closely the Speck family expenses fit the 50-30-20 Rule. (You can expect the months May through December to look a lot like January and February.)
Then make the exploration personal. Track your own household expenses for a month or more, and find how closely your own expenses fit the 50-30-20 Rule. How could you improve budget?
When you track your own expenses, you probably do not use exactly the same categoriess as the Speck family. Which categories did you add or remove? What does that say about your values, priorities, and lifestyle?