The Secret to Financial Freedom: Follow the 50/30/20 Rule
July 07, 2020 | Mason Roberts
If you have ever tried to save while under financial stress, then you are most likely aware of how difficult it is without adequate planning. In the case of an emergency where you need funds quickly, title loan places in Mississippi could get you up to $2,500 in cash. If you instead have your funds deposited into your account, then you could receive your funds in as little as a single banking day. However, if you are looking to improve your odds of financial freedom then following a budget could help. The 50/30/20 rule is a simple way to allocate your paycheck and hopefully maximize your savings. When you focus on your spending and document what you buy throughout a month, you may realize there are various ways you could cut back and save. Knowing exactly how much you should spend to avoid overspending can help you stabilize your finances and save at the same time.
What is the 50/30/20 Rule?
If you are having trouble developing your budget plan, then using the 50/30/20 rule can be a great place to start. The numbers refer to the percentage of your paycheck you should put towards specific purposes. For example, 50% of your check should go towards your essential payments. Things that need to be taken care of every month like rent should be included in this category. In all, the numbers represent:
- 50% for essentials
- 30% on needs or wants
- 20% on savings
50% for Essentials
Essentials can be anything you need to pay for that you cannot avoid. Things like food can be essentials but are not always. For example, going out to eat is not an essential purchase to buy buying groceries are. You should consider anything essential that you cannot substitute for something else. Purchases like gas for your vehicle to get to work, bathroom essentials, and more should be under this category. If you are struggling to grow your savings, then you should take a look at your essential purchases and consider if you need everything on that list.
Even within essential purchases, you could potentially find ways to save. Groceries can be expensive when buying only brand name products. Generic brands can provide a better deal and the same nutritional value but with a different flavor. Other purchases like steak can be expensive depending on the cut and size. Instead of getting a nice and expensive T-bone steak, maybe settle for a New York strip steak for that week. In the end, you simply want to make sure you cover all your essential purchases for the month using at most 50% of your paychecks.
30% on Needs
Your needs category should encompass the things you like to use your funds for every month that are not essentials. This can mean anything from your gym membership to buying a new piece of technology for entertainment. Things like your monthly subscriptions to websites and services like Netflix are things you need for entertainment but are not essential. Needs would include investing in your hobbies and friends. If you enjoy going to the movie every week, then you should make sure it fits your needs budget. This category is the easiest to subtract and add to as nothing in your needs category should be essential for everyday activities. If you are having trouble saving in Mississippi, then cutting things from your needs category could be the best way to improve savings.
20% to Your Savings
Now that everything you need to take care of every month is set up in your budget, you can move the remaining amount to your savings. If you stick to the budget plan, you could have about two paychecks worth of savings by the end of the year! Using the 50/30/20 rule could be a great first step to attaining financial freedom in Mississippi.
Need Emergency Cash? Apply for a Mississippi Title Loan Today!
Sometimes you need some additional help to get through the month and title loans could be an easy and fast way to turn your vehicle title in short-term funds. You could get approved today for up to $2,500 with only your vehicle, the vehicle title, and a valid form of photo I.D. Do not hesitate to go online and find title loan places near you to get the funds you need quickly. You can also apply for payday loans and signature installment loans at Mississippi Title Loans, Inc.