A simple rule to help build savings habit
Mar 15, 2023, 10:05 AM
SALT LAKE CITY — Sticking to a budget and building up savings can be a challenge. KSL’s Tamara Vaifanua explains a way to “Save more and worry less” by using a simple rule.
The key to this method is paying yourself first.
Financial planner Cathy Curtis said this method is an easy way for people to budget and save money. It’s called the 50 — 30 — 20 rule.
The numbers refer to the share of take-home pay that you set aside for different areas of your life:
- 50% of a paycheck goes to necessities
- “Must have” items like food, housing or transportation
- 30% goes to discretionary spending, or the “wants” column
- Entertainment, travel and shopping
- 20% goes to savings and paying down debt
The key is setting aside that 20% and then budget the remainder for needs and wants afterward.
Make sure to automate that savings where possible.
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