Who did not start saving money but gave up? Either because you can’t control your budget, you forgot to write down your expenses or you found everything too complicated.
If you’ve been in one of these situations, know that getting organized is the first step in helping you change your financial life and start saving.
I will show you that there are several ways to make this financial organization uncomplicated. A very simple, easy to implement and effective strategy, is the 50-30-20 method, which helps you split money for each type of priority and support your financial planning. see below.
What is the 20-30-20 method and how can it support your financial institution?
The 50-30-20 method consists of dividing your monthly net income into three parts (50%, 30%, and 20%), taking into account fixed expenses, variable expenses, and the money you’ll save. The main goal is to be able to balance your input and output and save money, and to understand where your money is going.
50% of fixed and basic expenses
In this part, you will list all the expenses that must be paid for necessities, such as housing expenses, electricity bills, expenses with supermarkets, transportation, and health insurance.
To determine what is necessary, be aware and assess what may be expendable and what is actually needed.
At this point, your fixed expenses may be greater than 50% of your income. In this case, it is best to review some expenses and decide what you can adjust so that your financial life is orderly and balanced. Keep in mind that you will always need to place limits on certain expenses.
– Control of energy consumption.
– Look for promotions when shopping at the supermarket.
30% for variable and unnecessary expenses
Everything that is not considered essential to their survival can be classified as expendable or variable expenses, such as pay television, entertainment, and daily pampering, among others.
To make it easier to distinguish between fixed and basic expenses (50%) and variable and amortized expenses (30%), think about what is really necessary (50%) and what you want (30%).
You don’t have to cut off everything that makes you happy and makes life boring! The advice is to balance your expenses, and learn how to better use your money to prioritize moments of pleasure.
– The problem is not the “cafezinho” you drink, but the lack of control and exaggerations. Stay in touch!
20% for financial and projects reserve. The money you will save
This is the money you will invest in your projects or will guarantee you peace of mind.
Ideally, you should name the reservations, such as quiet reservation, emergency reservation, new car reservation, home reservation, among others.
With this practice, your dreams begin to come true. But to reach this stage, it is necessary to complete the previous stages, so this stage is the reward.
If you have debts, this percentage can be used to pay them off.
– after, after Pay off debt, give priority to contingency reserves, which should be in highly liquid and low-risk investment options, such as CDBs which produces 100% of CDI (a rate close to the interest rate) or treasury Selic.
How to get out of theory and put the 50-30-20 method into practice
It’s time to put all your knowledge into practice and start organizing your financial life. Remember that the first premise of this technique is discipline, so let’s get started!
The first step
Know your total revenue.
Example: net salary of R$2500.00 (for those with variable income, the ideal is the average amount received in the last 12 months)
The second step
Break down the percentages for each step:
50% of fixed and basic expenses: R$1,250.00
30% for depreciable and variable expenses: 750.00 R$
20% of the money you’ll save: R$500.00
Make a list of the expenses you have planned.
Calm down, don’t be afraid! If your reality does not fit the above model, the ratios can be adjusted according to your moment in life, until you get used to financial regulation and then adapt to your projects and priorities.
Remember that the premise of this method is discipline, to generate what we call financial awareness, to help you understand how much you earn, how much you will spend, and that you have a planned path to achieving your dreams.
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