According to personal finance expert Sallie Krawcheck, the 50-30-20 formula is generally a good way to figure out how to allocate your income. Generally, about 50 percent of your income should go towards necessary expenses such as rent or mortgage payments, food, childcare, and insurance. Another 30 percent should go towards “fun” expenses such as restaurant meals or recreational activities. However, how you spend this money is at least as important as how much of it there is. The last 20 percent should go into your savings, for use by your future self.
- Budgeting for your life needs appropriately is the foundation to good financial health
- Figuring out what fulfills you, material or experiences, contributes to overall spending
- Finding a sustainable way to invest long term is critical to contemplate
“As research shows, how you spend is oftentimes more important than your overall income or the amount you spend in total.”