Cryptocurrencies are digital assets that can be bought and sold but unlike stocks, investing in cryptocurrency does not entitle you to legal ownership of a company. Rather, you are investing in a digital asset that you hope will increase in value.
How to Budget Money Using the 50/30/20 Rule
Budgeting is paramount when it comes to managing your finances. Basically, it’s about planning your income, expenses, and savings. Without a budget, you’re likely to spend your money without any real plan, and you won’t be able to keep track of where it’s all going. This can lead to a lot of expenses that you might not even be aware of, which can really mess up your finances and leave you in debt. That’s why budgeting, whether using a spreadsheet, budgeting app or pen and paper, is key to keeping your finances stable and secure. In this article, we will discuss how to budget your money using a simple yet powerful technique known as the 50/30/20 rule. Immerse yourself into this article, as we journey towards your financial freedom. Ready, set, go! What is the 50/30/20 Rule? Imagine your income as a mouth-watering cake that consists of three flavors: red velvet, chocolate, and vanilla. Let’s say you absolutely love the red velvet flavor, so it makes up half of your cake. The chocolate flavor is your next favorite, so it makes up 30% of your cake. Vanilla is not your favorite, but your mother likes it. So, to make her happy, one-fifth of your cake is vanilla flavor. When your cake arrives, you cut it into neat portions, each with its respective flavor, to enjoy every bite to the fullest. The red velvet flavor portion of your cake represents 50% of your income. The chocolate flavor portion of your cake represents 30% of your income. Finally, the vanilla flavor portion of your cake represents 20% of your income. This cake analogy represents the 50/30/20 rule. The 50/30/20 rule, also known as the “balanced money formula,” suggests allocating 50% of your after-tax income to needs, 30% to wants, and 20% to savings and debt repayments. The 50/30/20 rule is often attributed to Senator Elizabeth Warren and her daughter, Amelia Warren Tyagi, who elucidated the rule in their book, “All Your Worth: The Ultimate Lifetime Money Plan.” However, it is worth noting that while they popularized this rule, its principles have been advocated by various financial experts before their book was published. Brief Digression into Other Budgeting Rules You may not be familiar with other budgeting rules. Here is a quick rundown of a few other budgeting rules besides the 50/30/20 rule. The 50/30/20 Rule Explained Alright, let us dive back into the heart of this article. We’re going to take a closer look at the 50/30/20 rule and really break down how to allocate your resources. 50% Allocation to Needs “Needs” refer to the essential requirements for day-to-day survival, such as air, water, food, sleep, clothing, shelter, income, and so on. According to Maslow’s hierarchy of needs, people must first satisfy their basic physiological needs, such as food, clothing, and shelter, before they can fulfill their self-actualization needs, such as morality, purpose, and acceptance. This is largely true because only a person who is physically healthy can resist the immoral temptation of theft or seek to fulfill destiny. Needs vary from person to person, based on various factors, such as age, location, and health status. For instance, a pregnant woman may require monthly hospital visits as a necessity, while a healthy man in his prime may not need to visit a hospital for months. The 50/30/20 rule recommends that half of your income after taxes should cover your monthly needs. If 50% of your income cannot meet your needs, it may be a sign that your current phase of life requires more money than you are making. 30% Allocation to Wants “Wants” refer to the things we desire or crave but do not need for survival. They are the extras, the cherry on top of life’s sundae. Wants to encompass a wide range of goods, services, experiences, and indulgences that bring us pleasure, entertainment, or convenience. These can include dining out at fancy restaurants, splurging on designer clothes, treating ourselves to luxurious vacations, or enjoying entertainment like movies or video games. Wants to enhance our quality of life and make it more enjoyable, but they’re not essential for our survival or well-being. Although wants may appear to be lavish expenses, they can actually overlap with your needs category by including any desired upgrades to your basic necessities. However, the 50/30/20 rule suggests that these upgrades remain within the confines of 30% of your income. For example, a black lady doctor may need to purchase a “work-wig” because she cannot make time to constantly manipulate her hair into pretty weaves. She may upgrade her need by planning to buy a 10” Vietnam raw donor bone straight wig, instead of a 10” China human hair blend wig. However, if this 10” Vietnam raw donor bone straight wig is 5 times her 30% allocation for wants, she may need to purchase the China 10” human hair blend wig instead or pay in installments for a 10” Vietnam raw donor bone straight wig. 20% Allocation to Savings & Debt Repayment Savings are like a financial safety net, a stash of money that you set aside for the future. It is the portion of your income that you don’t spend right away but keep aside for emergencies, big purchases, or long-term goals. Savings can come in different forms, like putting money into a savings account, investing in stocks or bonds, or contributing to a retirement fund. Whether it’s for unexpected expenses, a dream vacation, or building a nest egg for the future, savings give you peace of mind and financial security. Saving is also important for debt repayment. It would be inconsiderate to lavish money on your wants, such as a 10” Vietnam raw donor bone straight wig, yet ignore the repayment of a business loan you took from LAPO Microfinance Bank. Anyone who earns should save. Even children should be taught to save, so they do not grow to be irresponsible adults. The 50/30/20 rule teaches you to save 20% of your income to secure your financial future
The 7 Best Budgeting Apps: Pros & Cons
Today, we will discuss about the 7 best budgeting apps, but before we kick off, let me share an adage which necessitates this article. My elementary school teachers regularly said an adage which is now ingrained in my consciousness. The saying goes, “If you fail to plan, you plan to fail.” How true! Nobody plans to struggle to pay bills after working a 9-to-5 for a month, but it happens, especially when people do not plan. Managing finances can be a daunting task, but it is critical because unplanned finances lead to a poor quality of life. On the other hand, planned finances could make an average income earner seem well-to-do. Anyone who will thrive must live within a budget. We live in the digital age, where budget management has been made easy by technology. Now, budget management can change from strenuous brain activity to a “one-swipe-away” kind of activity. With the advent of budgeting apps, you can conveniently set financial goals, track your expenses and stay within a budget. Now, you probably want to know what budgeting app to use for a seamless budgeting experience, especially if you have zero-to-little knowledge about budget management. In this review, we will delve into the 7 best budgeting apps worldwide. From user interface to features, we will explore what makes each app unique and how it can help you take control of your finances. The 7 Best Budgeting Apps YNAB (You Need a Budget) The YNAB app takes a proactive approach to budgeting, emphasizing the importance of allocating every dollar. It allows users to allocate funds to specific categories, such as groceries, bills and entertainment, thereby promoting mindful spending. YNAB also provides educational resources and live workshops to help users master budgeting. Why Does YNAB Rank Among the Top 7 Apps for Budgeting? The Drawbacks of the YNAB Budgeting App PocketGuard PocketGuard simplifies budgeting by providing an overview of users’ finances in one place. It categorizes expenses, tracks bills, and assists users in identifying opportunities to save. One distinguishing feature is its ability to analyze recurrent expenses and recommend potential savings, making it an excellent choice for anyone looking to improve their spending habits. Why Does PocketGuard Rank Among the Top 7 Apps for Budgeting? The Drawbacks of PocketGuard Budgeting App Goodbudget Goodbudget uses an envelope budgeting system, which allows users to allocate their money to virtual envelopes for different spending categories. It raises awareness about spending habits and encourages users to prioritize their financial goals. While its manual input may turn off some users, its emphasis on mindful spending is commendable. Why Does Goodbudget Rank Among the Top 7 Apps for Budgeting? The Drawbacks of Goodbudget Budgeting App Personal Capital Personal Capital integrates budgeting tools with investment management, catering to users to customers who want to attain long-term financial goals. In addition to creating budgets and tracking expenses, it provides investment advice, retirement planning and net worth tracking. While designed for investors, its budgeting capabilities are user-friendly and robust. Why Does Personal Capital Rank Among the Top 7 Apps for Budgeting? The Drawbacks of the Personal Capital Budgeting App EveryDollar EveryDollar, like YNAB, uses a zero-based budgeting strategy in which each dollar is assigned a specific purpose. It allows users to create custom budgets, track expenses and monitor their progress towards their financial goals. Why Does EveryDollar Rank Among the Top 7 Apps for Budgeting? The Drawbacks of EveryDollar Budgeting App Wally Wally offers a minimalist yet effective approach to budgeting, with features such as expense tracking and receipt scanning. Its user-friendly design allows for a hassle-free budgeting experience. Wally also supports multiple currencies, making it ideal for international users. Why Does Wally Rank Among the Top 7 Apps for Budgeting? The Drawbacks of the Wally Budgeting App Honeydue Honeydue, the “lovers’ budgeting app,” is designed for couples to manage their finances jointly and stay updated about each other’s financial activities. It fosters transparency and communication around money matters, helping couples work towards common financial goals. Why Does Honeydue Rank Among the Top 7 Apps for Budgeting? The Drawbacks of the Honeydue Budgeting App Mint: The Best, or Not? At the moment, Mint seems to be people’s favorite budgeting app because of its user-friendly interface and comprehensive features. With Mint, all of your financial information—bank accounts, credit cards, loans and investments—are conveniently consolidated in one location. Mint presents customizable budgeting tools which allow users to set financial goals and receive alerts when they exceed their spending limits. It also sends bill reminders. If you are familiar with budgeting apps, you may have wondered why Mint did not come up until now. Well, here is why. According to its owner, Mint will shut down on March 23, 2024, and will be absorbed by Credit Karma. Although Mint is the current favorite budgeting app, it may not exist in a bit. Hence, it is not among the 7 best budgeting apps in our books. Ready to Choose Your Budgeting App? Each of the top 7 budgeting apps caters to different people with different needs. When choosing a budgeting app, you need to carefully consider important factors, such as the subscription cost, the security, and the user interface. This review subtly reveals that not all budgeting apps offer significant value without subscriptions. Some budgeting apps do not automatically sync user’s financial accounts. Some budgeting apps do not have user-friendly interfaces, which can be especially annoying on mobile view. Also, not all budgeting apps have military-grade security, such as 256-bit and multi-factor authentication. So, among the best, choose wisely and choose early. Remember, “if you fail to plan, you plan to fail.” Frequently Asked Questions What are the 7 best free budgeting apps in 2024? The 7 best free budgeting apps are PocketGuard, Goodbudget, Personal Capital, Every Dollar, Wally, Honeydue and Expense IQ. What are the 7 best free budgeting apps in 2024 for iOS? The 7 best free budgeting apps for iOS are PocketGuard, Goodbudget, Personal Capital, Every Dollar, Wally, Honeydue and Expensify. What are the 7 best free budgeting apps in 2024 for Android? The 7 best free budgeting apps for Android are PocketGuard, Goodbudget,
