Now that you’ve determined what you need to do to hit your goal of 70%, it’s time to look at the remaining pieces!
20% of your income should go to debt reduction or savings
If we continue using the $3,000 per month example we used in the last post (LINK), 20% of that is $600 per month that will be allocated to this category. If you can’t set aside a full 20% each month, just do your best to put as much away as you can.
10% of your income should be donated or invested
Is there a charity or organization you believe in and want to support? Giving back is such a rewarding opportunity. You can also use the remaining 10% to invest in your 401K (in addition to what you may already invest directly from your paycheck) or Roth IRA, open a college savings plan, put money in a high-yield savings account, etc.
In closing…
Evaluating your budget can help reduce your spending to a more manageable number while creating an opportunity to proactively pay off debt and set money aside toward building your wealth.
I recommend being diligent about reviewing your budget monthly so you can more effectively keep track of where you’re at. If you’ve overspent in any one category, you can adjust accordingly in other areas.
You can do this!
