![]() For example, 50% for needs is not enough for those in high-cost-of-living areas. “This budget is restrictive and does not take into consideration your values, lifestyle and money goals. I’m a Financial Advisor: These Are the Worst Money Mistakes I See People Make Some Experts Say the 50/30/20 Is Not a Good Rule at All There, it’s next to impossible to find a rent or mortgage at half your take-home salary. 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. “A recent poll we conducted with our visitor base concluded that most people are nowadays spending upward of 70% of their whole income on basic necessities, which leaves a very small percent to be split between debt, investments and unnecessary expenses.” While people have a really hard time budgeting any amount for their wants, it is becoming harder and harder to even consider savings or investments,” said Alec Pow, CEO at The Pricer. “As prices continue to go up while incomes stay the same, a shift from the popular 50/30/20 budget is basically inescapable. ![]() More: How To Build Your Savings From Scratch Inflation and Wage Stagnation Make the 50/30/20 Unaffordable I’m a Financial Planning Expert: Here Are 5 Things You Should Never Spend Money on If You Want To Be Rich But it’s not a budget that works for the majority of Americans in 2023. It sounds pretty good on the surface, and it is a simple, straightforward way to structure your budget. This method dictates that 50% of your post-tax income goes toward “needs,” 30% goes to “wants” and 20% goes to savings. If you know anything about budgeting, you’ve likely heard of or even used the 50/30/20 method.
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