SPECIAL SECTION:
PERSONAL FINANCE
TAKE CONTROL OF YOUR
FINANCES
W
orking toward financial goals is high on many
of our priority lists, but it’s often thought that
achieving financial success is out of reach.
According to Bankrate.com, 1 in 4 Americans have more
credit card debt than savings, down 6% from 2015. Saving
doesn’t always come easy, but with a little planning,
determination, and self-control, you can get out of the red.
Creating a budget is the first step in building up your
savings and paying down your debts. Whether you are
saving for the short term (a new pair of shoes), the long term
(college tuition) or for a larger purchase (a house), seeing
where your money goes will help put saving into perspective.
A simple guideline for budgeting is
the 50/20/30 Rule. A tried-and-true
breakdown of monthly expenses, the
50/20/30 rule helps to benchmark
spending across three main categories: fixed
costs, financial goals, and flexible spending. The rule works
by allotting 50 percent of take-home pay to be spent on fixed
costs, 20 percent to be put toward financial goals, and the
remaining 30 percent to be used as flexible spending.
Fixed costs include monthly spending required to live.
Think of the essentials: food, shelter, transportation. Your
mortgage, utility bills, and transportation costs are often
similar month-to-month and easy to predict, making this
category the easiest to budget.
Financial goals will help you get to where you need to
be for your future. This includes saving for retirement,
paying down debts, and building your emergency fund.
Flexible spending varies from month to month, but
can be somewhat predictable. Groceries, gas, and
entertainment all find their way into this category.
While some of these costs can be impulsive (going to
the grocery store on an empty stomach and buying
everything in sight), you can look at monthly spending
to gauge what you typically spend on these types of
purchases.
Once you determine where your money is going, and what
you have left over, start by paying off your most expensive
debt first. Look for the credit card with the highest interest
rate and start paying off the balance by making more than
A simple guideline for budgeting
is the 50/20/30 Rule.
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