An article published by CNBC last December reported that about 63% of Americans are currently living paycheck to paycheck. That’s nearly 2/3 of the people in this country only one paycheck away from not being able to provide for themselves and possibly their family.
As the recent events of the global pandemic shows, life can be completely unpredictable. Despite this truth, the financial impact of those times can be much more manageable if people are able to create a budget to build up their savings for when a financial emergency strikes. Regardless if you currently have a lot of bills or none, building up a solid foundation of budgeting now can prove beneficial to you for years to come.
A popular budgeting principle is the 50/30/20 rule. The rule is simple:
· 50% of your income goes to your needs
· 30% of your income goes to your wants
· 20% of your income to your savings and debt repayment
This is a base budgeting system you should work to implement in your life. You can tweak the plan if you feel like you need less of your money going to your needs or wants. However, you should always commit to saving a minimum of 20% of your income because you never know when you might need that money to help with a financial emergency. Once a budgeting plan is set up, you're ready to begin tackling your financial goals.