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50/20/30 Rule: How To Make a Budget With This Flexible Method

50/20/30 Rule: How To Make a Budget With This Flexible Method
The goal of the 50/20/30 budget is to break down your monthly after-tax income and focus your spending in three broad categories: Essential living (50%), financial goals (20%) and personal spending (30%). Would this budgeting method work for you?

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I've found that this method is more complicated than it seems at first glance. At least, it has been since we stopped getting "pay stubs" and have to go online to try to figure out what bits that are taken out of my paycheck automatically go into which category.

For example, a lot of my "financial" goal savings go directly into my 401k. Fine. But so does the employer match. Does that mean that I have to add the employer match to my "after tax" income? Because if not, I'm going to end up with over 100% allocated somewhere.

I get that my contribution to health insurance is an essential cost. But what about the employer part? Does that also go into the numerator and denominator? If not, I am not taking into account the real cost of the insurance.

What about my union dues? I don't have to pay them, but the union negotiates my salary and working conditions for me. I think that is important.

What about the money that goes into the medical flexible spending account. If I were taking into account doctor co-pays on my own, I would call them essential. But if I decide to splurge on prescription sunglasses (also covered as are a few other things that don't seem that essential) do I have to reallocate whatever portion of the $x per pay period that go there?

Part of my xfinity bill is for internet. Essential. Part is for HBO. Not essential. What about the part for basic cable? Or my "land" line?

Honestly, I just pick a number that seems like a decent amount to spend per month. It is much less than I am bringing in. And another, much much smaller number, that goes into the "fun" account. I try to live as much as humanly possible, including travel involving visits to family and replacing essential bits and pieces on the decent amount. Haven't touched the fun money since I set it up a bit over a year ago. But it will be used on a vacation or something extravagant (fancy new mattress) or both eventually.

The two amounts together make up about 2/3's of my take home pay (with taxes, 401k, health insurance, medical flex account, union dues, etc. all taken out). The other 1/3 is also savings, some of it going to fund the ROTH IRA. Yes, I save a lot.

No, not at all, mine would be and has been before as follows,

50 % financials. Retirement goals, stocks, ETFs, CEFs, MLPs, etc.

35 % essential living. My monthly bills, food, electricity, and cell bill.

15 % personnel spending. Added bonus to spend how I please.

This is just for myself, as my home is paid off.

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