But a paycheck-to-paycheck lifestyle isnt always the result of not earning enough money.
What Is the 70/20/10 Budget?
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Making bank but still living paycheck to paycheck? You’re definitely not alone. Seeour tipsfor breaking the cycle and getting your personal finances back on track.
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See if there are some fixed expenses you might save money on, like insurance premiums.
Making minimum payments on high-interest-rate credit card debt or car payments?
Consider finding another source of monthly income so you’re free to do a rapid debt payoff.
Savings are also important to handle variable expenses that might come up when youre paying bills.
However, its also OK to save money for multiple savings goals at the same time.
This money, however, is for making additional payments thatll help you crush your debt faster.
Making additional debt payments should always be a priority.
Skating along and making the minimum required payments means youll pay more money in interest over time.
If youve got multiple debts youre working to pay off, consider using thedebt snowballor avalanche methods.
With the debt snowball method, youll start with the debt with the lowest balance.
With thedebt avalanchemethod, youll first focus on the debt with the highest interest rate.
If you are debt-free, use the extra cash to give to organizations or causes that matter to you.
Many budgeting plans dont specifically factor in donating, which makes the 70/20/10 method unique.
These two budgeting methods are both percentage-based budgets.
They divide your take-home pay into three broad categories.
And they prioritize saving money and contributing positively to your financial future.
However, the 70/20/10 budget rule does not separate needs from wants when it comes to spending.
It also stands apart by designating a portion of your pay to go toward donations or giving to others.
Its a pretty simple money management method to follow similar to the spend-save-share money jars for kids.
While this budget has some structure, its not super strict or restrictive.
You dont have to zero in on exactly how youll spend every dollar.
Another benefit of this budgeting style is that it prioritizes your financial future.
For a more structured budget, try abare-bonesapproach.
Use Direct Deposit to Your Advantage
Set up separate bank accounts for each percentage bucket.
Adjust your direct deposit allocations to match the 70/20/10 rule.
Automate Your Bills
Put your bills on autopay with the date set for right after youre paid.
Review your spending periodically to verify youre striking a good balance between needs and wants.
Abudgeting appcan help you keep track of your spending with little effort on your part.
Usingcash envelopescan be helpful to ensure you dont overspend in certain categories.
Nicole Dow is a former senior writer at The Penny Hoarder.
Staff writer Kaz Weida contributed.
(Can you sense my millennial sarcasm there?)
You know which ones were talking about: rent, utilities, cell phone bill, insurance, groceries…
