Wants vs. needs: Try the ‘50/30/20’ budget plan

Wants vs. needs: Try the ‘50/30/20’ budget plan

(WWBT/WXIX) - The “50/30/20” budget plan is a popular way for people to budget “wants” and “needs."

Here’s how you do it:

The “50” is taking 50% of your after-tax dollars on necessities like your rent or mortgage payment, food, utilities, insurance and child care.

You then spend no more than 30% on wants. That’s dinners out, gifts, travel and entertainment.

Not everything is easy to put it in this category. Is a gym membership a need or a want for you?

And finally, budget 20% of your after-tax income for savings.

Save for the unexpected, like an emergency fund, or even saving to pay off debt.

If you’re eager to get out of debt as fast as you can, you may decide your “wants” can wait until you have some savings or your debts are under control.

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