What is a Budget Planner?
How budgeting planning can look, varies for different people. Some may use it to prioritize savings and control their spending while others may use it for irregular income or simply to just get back on track after a setback.
Here at BDCU money tips we will be discussing the budgeting technique ‘The 50/30/20 rule’ which includes placing your money into 3 different categories based on your post-tax income.
The 50/30/20 rule: 3 Categories
50% — Needs
Needs are considered necessary expenses for basic well-being and survival.
Common “Needs” include:
These needs can vary as everyone’s necessities and personal interpretations are different. Consider cutting down on your necessary expenses by asking yourself – Could I save money by shopping at a different supermarket? Can I cut down fuel costs by driving less?
30% — Wants
Your wants are more personalised and considered nonessential.
Common “Wants” include:
- Gym memberships
- Streaming services & other entertainment
- Beauty appointments
- Eating out
- Other hobbies
20% — Savings and Debt Repayment
Savings and debt repayments will depend on your personal circumstances.
Common “Savings” include:
- Emergency funds
- Retirement contributions
If you’re debt-free or your debt is a low-interest mortgage, consider devoting 20% of your net income to savings.
If you have a credit card balance or student loans, you need to consider how you will split your debt repayments and savings accordingly. As It is important to priorities high-interest debt to gain financial stability.
Information suggested and shared by Restore College Bradford
What is BDCU doing to help?
- Keeping your savings habit – though you may want to cut down your savings, reducing it down and keeping it going will help you build financial resilience for a rainy day.
- Our consolidation loan may help by bringing together your existing credit cards, overdrafts, and non-BDCU personal loans into a new cheaper loan. (Subject to credit and affordability checks)
- We have other discount loans so keep an eye out on our special offers page
- Read our money tips for more useful information.