One good way to build a budget

If you search for “what is the best way to budget?” you’ll get over a billion results. There’s no shortage of opinions about which option is the absolute best way to do it. The truth is the best way to budget is the way that works for you.

If you’re new to budgeting, or just want to try a different approach, we think the 50/30/20 budget is a good place to start. The 50/30/20 budget starts with your monthly income and then splits that up into three broad categories: 50% to needs, 30% to wants, 20% to savings/debt repayment. Needs (50%) are things that would severely impact your life if you didn’t pay them. A want (30%) is any payment you can cut back on with only minor inconvenience. The last portion is for your monthly savings (20%) like contributions to your 401(k) and debt repayment.

We have more on the 50/30/20 budget in a short article right here, including instructions for building yours from the ground up. We’ve also created a template for this budget that anyone can use. You can download a copy for yourself here.