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![]() ![]() Recommends earmarking 10% of spending for special occasionsĪllocates 30% to “wants,” including regular and occasional expenses Higher target, guidance on how to divide savings 50/30/20Ĭontrols recurring expenses, regardless of whether they’re “essential”ĭistinguishes between “needs” and “wants” A side-by-side look reveals differences in how these budgets can help you think about money: By the numbers: 60/40 vs. Another popular approach is the 50/30/20 rule, where half your income covers needs, 30% goes to wants, and 20% is for savings. ![]() The 60/40 budget isn’t the only strategy that splits income into broad segments. How does the 60/40 rule differ from the 50/30/20 rule? If you’ve met one savings goal (for example, you feel you have enough in your emergency fund), you can start a new goal, like building an investment account. For example, if you have debt to pay off, you could replace one saving category with “debt repayment.” Or, you could shrink all four categories to make room for a fifth. You may need to tweak these categories to suit your situation. 10% “fun money” for activities, trips, or other infrequent splurges.The rest of your income can go to savings goals or spending that falls outside your typical monthly lifestyle. But if you’re a freelancer or contractor who pays estimated taxes each quarter, determine how much to set aside every two weeks to cover them: Because there are 13 weeks in a quarter, divide your quarterly tax payment by 6.5. Keep in mind that if you’re an employee, some committed costs, like taxes and health insurance premiums, might come out of your paycheck automatically. 60% of that-how much you can budget for committed expenses every two weeks-is about $1,380. ![]()
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