MyMoney Online, Personal Finance with Warren Ingram, Evergreen Content

‘Budgeting’ for people who don’t budget (and probably never will)

Most people are aware of the importance of saving money and controlling expenses.

A great way to do just that is to draw up a budget.

If you’re not the budgeting type; you may want to consider the following simple savings plan - called the “50/15/5” (developed by Fidelity in the USA).

50% of your take-home pay goes to essential expenses.

  • Housing — mortgage, rent, property tax, utilities (electricity, etc.), homeowners'/renters' insurance

  • Food — groceries only; do not include takeout or restaurant meals, unless you really consider them essential (e.g. you never cook and always eat out)

  • Healthcare — health insurance premiums and out-of-pocket expenses (e.g. prescriptions, co-payments, etc.)

  • Transportation — car, petrol, car insurance, parking, tolls, maintenance, commuter fares, etc.

  • Child care — day care, tuition and fees

  • Debt payments and other obligations — credit card payments, personal loans and life Insurance

15% should go to retirement savings.

5% should go to an emergency fund (until you have up to 6 months’ expenses saved up).

If you’ve been disciplined, and you stick to the above every month, then the remaining 30% is for fun – enjoy!

The Money Show’s Bruce Whitfield interviewed Galileo Capital Personal Financial Advisor Warren Ingram about the “50/15/5” savings plan.

For more detail; listen to the interview in the audio below.

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