The 50/30/20 Flan Budget Method
There’s nothing sweeter than a slice of your abuela’s flan 🍮. Just like there’s nothing sweeter than figuring out the perfect budget. There are lots of budgeting methods out there to choose from pero that doesn’t mean they’ll all be right for you 🤔. One of the more straightforward, and simple ones, is the 50/30/20 Budget. This method is as simple as cutting yourself un pedazo grande de abuela’s flan and then figuring out a few smaller pieces for su herman@s so they don’t feel like they’re missing out.
According to the Logical Dollar blog, the numbers 50/30/20 in the name refer to different percentages to split your monthly after-tax income. Your paycheck will be split between “Needs 🏡”, “Wants 🛍” and “Goals 🔜.” In theory, these three “buckets” are easier to keep track of than figuring out a dozen smaller categories (that ultimately fit into one of these three “buckets”).
To break it down:
50% NEEDS 🏡
These are las cosas that will always be there like rent or mortgage, groceries, etc. Think of the things you need para vivir; food, shelter, utilities. Health care also goes in this category, and according to Investopedia, so does at least the minimum payments on debts.
30% WANTS 🛍
These are things like trying that new Peruvian restaurant that just opened or hitting up a Marvel movie opening weekend. Eating out / getting takeout, going to the movies, vacations, anything that you really want pero that you can ultimately live without. También, Investopedia mentions that “wants” includes any upgrades like a luxury car vs a basic sedan.
20% GOALS 🔜
Not #squadgoals; we’re talking about building financial security. So, things like savings, paying off debt, or money toward investments and the stock market are what go into this category.
The 50/30/20 method helps you easily see if you’re spending too much in one category. Like, if you find yourself out of lana in your “wants” before the end of the month, it’s time to rethink your spending habits mij@. Estarbucks no es un necessity! ☕️
If you’re spending more than 50% on “needs,” you can also cut back on the “wants” category or Investopedia mentions trying to downsize your lifestyle. Things like trading in a car 🚗 for la Guagua 🚍 or moving to a smaller casita.
Of course, the hope is always to save up a good chunk of dinero💰 for the “goals” portion. This portion helps cover any unexpected expenses. Your “goals” portion is also how you start building financial security that helps get you closer to retirement savings and being able to pass on some generational wealth.
Mira, you can kinda think of this method like how you budget only 50% of your stomach on dinner so you’ll have plenty of room “saved” for flan 😋. Only your money ahorros will have you drooling more than dessert.
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