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In this series, we will go over a few different types of budgets and problem they are trying to solve. If you are following along in this series please review the following budget:

  1. Zero-Line
  2. 50-30-20-budget

The next budget we are going to cover is 60% budget. This budget is a twist on the 50/30/20 budget by using 60% as the basis for the “Committed Expenses”

The budget breaks down like this:
60% – Committed expenses
40% – savings broken into 4 categories
10% – Retirement Savings: 401k / IRA
10% – Long Term Savings: Something that would be hard to spend
10% – Short Term Savings: Emergency fund, irregular expenses
10% – fun money

What are committed expenses?

-Rent / Food / Utilities / Transportation / Bills

For example. A budget with $1000

60% of it is 600$

40% of it is 400$

and this is how it gets applied.

ExpensesCostBudgetTotal left
60% Expenses
Rent$20020%400
Food$10010%300
Utilites$505%250
Transportation$505%200
mentorship$20020%0
40% Savings
Savings 401k10010%300
Savings Emergency10010%200
Savings Long-Term10010%100
Fun Money10010%0

60% in this case we allocate our budget based on percentage. We have decided to automate savings and then lump major expenses such as Rent/Food/Utilities/Transportation into the 60%. Then we have savings which is defined as emergency fund/IRA under multiple categories. To expand on this, if you have student loans or debt you can take a combination of long-term money and fun money and use that as the basis to pay debt. This will allow you to use 20% of your income to pay debt.

Aspects of 60% budget that often go neglected.

Wants may not be properly defined
One-Time annual expenses
Seasonal expenses
Accounting for pulling from savings
Why are these important to mention?

Mentioning these is important because of consideration of whether having to dip into savings in order to cover an expense. With that said if you want to automate your finances a bit more and create more flexibility 60% budget is for you.

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Categories: Budgeting