Financial Puzzle

Want More Out Of Your Money? Budget, Budget, Budget!

Better medical practices exist, technology’s faster, and cars are safer than they were 20 years ago. The same cannot be said about money. Generation after generation people continue to struggle financially. We can’t figure out what to do with our money. Pay off debt? Save it? Invest it? Or spend frivolously? Finding the right balance continually doesn’t happen.

Mapping out a plan for your money becomes the first step. The 50/20/30 budget rule is a commonly known guide and works for many people. 50% of your budget goes to necessities. This includes housing, food, clothing, transportation, and whatever else you see fit. 20% goes to savings, investments, or debt. The finally 30% gets allocated to lifestyle choices or wants. Whatever you enjoy, spend that money here. These resources help gain a visualize concept of the 50/20/30 rule. Importantly, this guide is based on after-tax dollars.

"Yes, food and shelter are both necessities, but people choose to live in bigger houses than they need and eat out instead of buying groceries."

The 50/20/30 rule has one big question, the difference between a necessity and lifestyle choice (want)? In theory most necessities are truly just lifestyle choices. For example, choosing where to live or eating out frequently, that’s a choice. Yes, food and shelter are both necessities, but people choose to live in bigger houses than they need and eat out instead of buying groceries. Really we spend more than we need most of the time and it’s hard to realize. We can all take a step back, be honest with ourselves, and truly consider what a necessity is.

A general budget or the 50/20/30 rule is a starting point. Just because you have a budget set up doesn’t mean you stop there. You don’t have to follow any guides necessarily, but they give you a baseline which you can tweak and change from there. The hardest part is making a conscious decision to budget. Me, personally, I struggle to budget without a tool or spreadsheet that shows me the results. If you’re this way as well, use calculators, apps, or spreadsheets to accomplish a budget.

Lastly, I’ll leave you with a story.

Two close boyhood friends grow up and go their separate ways. One becomes a humble monk, the other a rich and powerful minister to the king.

Years later they meet. As they catch up, the minister (in his fine robes) takes pity on the thin, shabby monk. Seeking to help, he says:

“You know, if you could learn to cater to the king you wouldn’t have to live on rice and beans.”

To which the monk replies:

“If you could learn to live on rice and beans you wouldn’t have to cater to the king.”

Which do you want to be? The monk or the king?

About Colin

ACU logoI’m Colin McCabe, the newest Communications Specialist at Arapahoe CU. A recent college graduate from Colorado State University, I carry a background in writing and communications. I joined the team here with minimal experience in the banking industry, but this has presented a unique opportunity. Working at Arapahoe CU is complete immersion into personal finance, something that’s foreign to me. Luckily, I am surrounded by financial experts working for a not-for-profit. They provide stories, experience, resources and tools. Combining communications skills with my ever growing financial knowledge, I’m here to share perspective, work and the resources surrounding me. The Financial Puzzle was created for this reason.

Of course, my path towards financial success is just one of many and the credit union is here to help all. If there is an issue or topic you are interested in, let me know! I will get the staff working on your answer and help you avoid the inaccuracies laden in the internet’s search results.

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We all want to live our own way.  It's important that we do it the right way.   Arapahoe CU looks to help.