There is no denying that the cost of living has skyrocketed and income is trying to catch up, albeit in snail-pace. But the disparity between income and cost of living is not that great that it is impossible to survive.<\/p>\n
Perhaps, we should do some self-reflection and look at our finances to figure out how we can cut and trim to match our current cost of living. We can\u2019t have it all \u2013 buying our first home and shopping every weekend, something\u2019s got to give.<\/p>\n
So, how do you do it? What can you sacrifice and what do you spend on? Here I break down budgeting in the easiest way for you, and show you how you can benefit from it:<\/p>\n
We can\u2019t say it enough times: Don\u2019t spend more than what you earn! And the best way to do that is to keep track of what you spend.<\/p>\n
One simple way of keeping track of your money is through percentage budgeting. It is a simple and straightforward concept \u2013 instead of allocating fixed amount to every line item, you establish a target percentage for each expense category.<\/p>\n
One guideline that we like to use for percentage budgeting is the 50\/30\/20 rule.<\/p>\n
Here\u2019s the breakdown:<\/p>\n\n
| NEEDS \n50%<\/b> \n \nBills and fixed expenses such as rent, \nmortgage, basic groceries, etc.<\/td> | WANTS \n30%<\/b> \n \nDining out, entertainment, vacations, \netc.<\/td> | SAVINGS \n20%<\/b> \n \nRetirement, down payment for a new home, child's education, etc.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n |