50/30/20 budget

It's important to not fall into the trap of "I like the idea of X budget" and try to force it into your life. I grabbed part of my 2018 spending to see if it worked out within the guidelines of the 50% needs / 30% wants / 20% savings, as I felt like I didn't spend ridiculously. Then I looked at the numbers. Here are the percentages per month from May to December.



MayJuneJulyAugSeptOctNovDec
need42%47%43%67%66%36%43%37%
want45%27%22%19%24%54%39%14%
savings13%25%36%14%10%10%19%49%

I guess I didn't. However, I spend over $3,500 on medical last year due to dizziness, and had MRIs and all sorts of crazy things. Is that a need? It's certainly not a want, but need suggests something you'll always have, like property tax or rent, unless you are interested in living in a house boat - oh, wait, marina fees - or, I guess, being a squatter.

The table above suggests to me that my needs and wants bounce around. I spent more replacing some furniture in May, and did my Christmas shopping in October and November, and in August and September, I spent several thousand on medical bills. I would feel bad if I had several months of 10% savings when the goal is 20%, but I can't just not pay medical bills. If the budget you select makes you feel bad for money you spent that was actually necessary, perhaps that budget is not for you.

However, if I look at it all together, May through December, it looks like this:


need47%
want31%
savings22%

I guess I was right in line. I just didn't know it because I looked too close to it. I don't like having to look so far out to know if I'm still on track for my savings goals. It's why I like the Pay Yourself First thought. If you expect straight away to pay yourself first (mostly by contributing to the 401k or 403b) you don't have to worry as much about money flying away from your checking account - it never hit there anyway. And if you're picking a percentage that allows for a worry free retirement (usually 15%+) then you've hit your retirement savings goal and can focus on other goals in the meantime. While the 50/30/20 budget might work for some, even though in the aggregate I ended up following it, it didn't work for me.

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