3 Steps to Creating a Budget You Can Live With

man on sofa with laptop

Finally, you have a paycheck and you can spend it any way you want. But wait! There are bills to pay. Taking that first leap into adulthood is exciting and scary at the same time, but with this simple budget guideline, you’ll stay on track by planning ahead and spending your money on the things you should. The 50/20/30 rule is easy to follow and can help you keep track of your spending while also making sure you’re putting money aside for savings. Whether you’re just starting out or have struggled with keeping a budget for a while, these fundamental principles will get you on the right track.

Before you get started, make sure you know how much money you have each month. Look at your paycheck and determine your income. Then it’s time to split it up.

50% of Your Income – Essentials

Take your monthly income and determine how much is 50%. Once you have that number, look at your essential expenses. These expenses include housing, food, transportation costs, utility bills – anything you’d have to pay no matter where you live or work. This could also include items that you feel are necessities.

20% of Your Income – Savings

Next take your total monthly income and determine 20%. Once you’ve taken care of the essentials, it’s time to dedicate 20 percent of your take-home pay toward savings. This includes 401K and other savings plans, debts that you need to pay off (such as credit cards) and emergency funds. Paying off those debts might not sound like saving, but once you pay off other debts, add those payment amounts to your savings and you will soon see your savings grow.

30% of Your Income – Personal

These are entirely optional expenses that you decide whether you want the benefit they provide or not. There is a variety of expenses in this category from your cell phone bill with unlimited data to eating out at lunch or going to the movies with friends. This category is one of the most flexible because it all depends on your interests and what you have to have.

Establishing good habits now will help you as your income grows and because it’s a percentage based system, it will be easy to adjust along with your paycheck. Though the 50/20/30 is an easy guideline, you’ll want to take a close look at what you consider essentials and what is simply a personal expense.

At Allegacy, we have digital tools like Enrich to help you budget for greater financial wellbeing. We can also help set up automatic transfers to keep your savings goals on track! Visit a financial center or call us at 336.774.3400 to learn how!


  1. The 50/20/30 rule for minimalist budgeting. Mint.

The information contained above is for informational purposes only and is provided as a service to our members, and is not legal or tax advice. 

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