Budgeting is hard, and we are the first to admit that managing money presents a unique challenge. Managing the numbers is (relatively) easy, but managing our very human wants, needs, and goals can be really hard, and balancing the lot can feel impossible. This is why rigid, granular budgets don’t really work for us. If we overspend on wine (let’s be real lmao), we don’t want to feel like trash, we just want a plan to move forward, better. Thankfully, our better budget is a simple one. Meet the 50/30/20 Rule. Budgeting, But Make It Not ScaryMost often, folks gravitate towards granular budgets which make use of specific values. This month, for example, one might spend $104.68 on one’s phone bill, $1,500 on rent, and $20 on wine (all of these figures are absurd for different reasons). But, when—not if—you overspend on something, the budget breaks. Your spreadsheet starts flashing red and your laptop threatens to self-destruct like in those Tom Cruise movies he’s still making for some reason. You went over budget! You are garbage and not an adult! You have no self control! But none of that
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As of 2019, only half of Canadians had—and used—a budget.¹ As of 2020, the way we use budgets was, perhaps, altered. Let’s just leave it at that. Looking forward into 2021, as we see the light at the end of the big, dark, global tunnel, many Canadians are hoping to find rhythm, reliability, and normalcy in their finances again. How do we know? In Canada, search terms “budget” and “how to budget” saw upticks on ye olde Google Trends, which likely reflects a desire to get back on our collective feet. Here are three of our favourite budgets meant to encourage financial agility and awareness, reduce financial stress, and to save you money. 1. 50/30/20If you’re a regular around here, you’ve seen us write at length about the 50/30/20 Budget. It’s kind of our go-to. This budget is a ratio-based budget, which is intended to let you stress less about individual purchases and line items in favour of maintaining a still vigilant but broader view of your budget. To use this budget, determine your net income. Next, allocate 50% to your “needs” (fixed costs, like rent and food); 30% to
Paying down debt is no fun, but it’ll help you in the long runWe’ve written at length about our golden ratio for budgeting, the 50/30/20 Rule. A quick explainer: this budget allocates 50% of your net income to paying for your fixed costs, like housing and food; 30% goes to your “wants,” like Netflix or concert tickets (RIP); and 20% goes to your goals, including meeting savings goals and paying down debt. This ratio can be useful because it helps provide a consistent but flexible framework to keep perspective on reaching your financial goals. Of these three categories—needs, wants, and goals—the first two are pretty self-explanatory. But how do you design more focused financial goals? We’ll give you our two cents here, but remember, financial goals are incredibly personal; no two people will have precisely the same goal and the same means to achieve it. Your financial goals have to come from you after your own careful consideration. Pay Down Debt First For many people, paying down high interest debt first can be a smart strategy. There are of course some different schools of thought on this, but we feel pretty strongly that
The Smart Spending Blog at Mogo is your home for the best in personal finance strategies on saving, spending, budgeting and deals. We get a lot of questions on budgets, the best ways to do them, and the easiest steps towards financial success. Here are some of the most popular budgeting posts – including some that have saved our readers hundreds, and even thousands, of dollars! Dig deeper into each article and see why Mogo is here to save you bucks, and how we can help you do it! 1. Cash in hand budgeting Learn how you can save money by only using cold, hard cash. Ditch the fancy budgeting software and tough strategies – and look at how we recommend dealing with weekly and monthly budgets where cash is king. 2. Skip budgeting software, and crowd-source it Want another great tip for mostly-cash budgeting? Add the extra step of family involvement. Share financial goals and money-limits with the entire family. It’s a great way to get everyone on the same financial page – and definitely helps with weekly budgets and spending limits. 3. Getting ahead of the game Start saving now to make expensive times of the year much, much easier.