3 reasons I love the 80/20 budget method

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Is the 80/20 budget method right for you, too?

the main points

  • The 80/20 budget method is the joint budget approach.
  • It includes saving 20% ​​of your income and reducing your spending to 80% of your earnings.
  • This technology allows you to put savings first, which is flexible and easy at the same time.

there is a lot of Different approaches to budgeting. My favorite though, is the so-called 80/20 budget. With an 80/20 budget, you keep your spending on the essentials as well as the frivolous expenses at 80% of your income and save the remaining 20%.

This was the type of budget I found most effective for me in the long run, and it’s a great way to put together a spending plan if you don’t really enjoy the budgeting process.

So, why do I like this approach so much? There are three main reasons.

1. It prioritizes savings

The main purpose of budgeting in the first place is to make sure you save a lot of money (and don’t get into it Credit card debt or living beyond your means).

After all, when it comes down to it, it doesn’t really matter whether you spend a little more on housing and a little less on your car or vice versa – as long as you set aside enough money to achieve financial goals and build wealth.

The 80/20 budget really focuses on that primary purpose of the budget and that’s why it’s so cool. Puts Saving Money front and center. The Just The sure thing you need to do to stick to the 80/20 budget is save money. As long as you can follow the requirement to save 20% of your income, you will have accomplished your most important financial goals.

2. It’s simple

Another big benefit of the 80/20 budget is its simplicity. There is no need to make a list of the dozens of different things you spend your money on each month when you set this kind of budget. There is no need to try to decide in advance whether you will spend more on entertainment and less on eating out or on clothes or vice versa.

As long as you prioritize saving first as the budget requires, and you don’t find yourself spending too much and going into debt, you can be financially successful with this budget without much hassle.

3. It is flexible

Flexibility is another big benefit of an 80/20 budget. If you have a budget where you set specific spending limits for each different type of spending, you may find yourself in trouble when things don’t go as planned. If you budget a certain amount for groceries and then inflation drives up prices in the store, you’ll have to rewrite your entire budget.

But with an 80/20 budget, you can only spend what you need on groceries and stop spending on other non-essentials that month once you reach your 80% spending limit.

Now, this budget will not work for her Everyone Because some people end up overspending if they don’t have detailed limits on where their money should go. But if you set up an automatic transfer to savings of 20% of your income and can live on the rest of the rest without finding yourself cash-strapped and having to borrow, there’s no need to get into more detail about your budget process.

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