Master the Budgeting Basics

Spend less. Save money. That’s all you need to do to be in better financial shape, right?

Life is far more complicated, and you need to enjoy yourself or cover emergency expenses every once in a while. Build a budget that fits your lifestyle while keeping these tips in mind.

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The 50/30/20 Rule

Start simple when thinking about budgeting. You can always adjust as you get to know your specific spending habits, but 50/30/20 is a good general rule for beginners. Dedicate 50% to needs, 30% to wants and 20% to long-term savings.

The word “needs” is a tricky one. Needs include expenses like housing, transportation, utilities, insurance and health care; however, you can always opt for a more affordable car, downsize to a smaller house or save by switching insurance. This is just something to think about, and tracking your budget may help you make those types of decisions in the future.

Wants are simple. These are expenses from activities like eating out, subscribing to streaming services, buying a nice outfit or taking a vacation. These are the easiest things to cut down on, and that’s part of why they should make up a smaller portion of the budget compared to your needs.

20% is a good benchmark for savings, but what are these savings for, exactly? Planning for retirement and preparing for emergency expenses are two goals you could focus on. And modern technology makes saving easy too—set up automatic transfers with your financial institution or request your direct deposit to be split into different accounts.

Let Goals Lead the Way

Needs, wants and savings don’t tell the full story. Money is a big part of achieving your dreams, like paying for a new car, a new home or college education.

You will need to adjust your budget depending on your stage of life. For example, you will probably need to sacrifice wants or savings if you’re funding a home renovation.

Navigating the peaks and valleys of spending can be frustrating, but tracking your budget over time is the best way to make adjustments and maintain balance.

Graphic of Vantage mobile app on a phone

Your Budgeting Toolbox

There’s an app for everything these days—including many related to budgeting. Digital banking tools, including the Vantage™ mobile app, offer the ability to monitor spending based on category and set savings goals.

You could also go the old-fashioned route and use a spreadsheet to enter what you’re spending each month and keep an eye on trends if you have the patience and time. As always, whenever you go with a digital tool, do your due diligence and please make sure that it comes from a trusted source and can be password-protected.

You do have another option for figuring out your budget—speak with an expert. Vantage has financial coaches who are happy to meet with you. They can walk through your current situation and offer guidance to help you on the path to success.