30/30/30/10 rule

30/30/30/10 Rule Whether you are a parent with two kids or recent college graduate working your first job, 30/30/30/10 rule can help you assess your budget. This approach often helps to understand the big picture of where the money is going.

Let me break your budget in 4 buckets (rather than the seemingly infinite categories of some traditional budgeting). It is designed to help you figure out how much you may want to allocate to each area every month, and can also help you determine the order in which your money can be allocated.This is a rule for breaking down your budget.

The 30-30-30-10 rule puts first 30 percent​of your budget towards necessities, including shelter, food, utilities, transportation, clothing. These are the things you need to get by day to day.

30 percent​should then go toward financial goals, like paying off debt or saving for retirement.

Investing in a safe job. This 30% of your budget goes to long-term savings and extra payments you may have.

30 percent​should go to ‘Investment Risk'. Someone much wiser than me once said that if you don't know where you're going, any path will get you there. This couldn't be truer than when it comes to investing. And often it will be a lot more dangerous. So there's never a bad time to become wiser about your investing process.

Finally, 10 percent​of your income can be allocated to your wants, like dining or entertainment.

To sum it up, with this budgeting rule, you put 30% of your money to necessities, 30% to long-term savings and debt payments, safe investments, 30% to lifestyle choices and non-necessities, risk investment, and 10% in you.

If you learn something today that you didn't know yesterday, it will help you tomorrow.

Zeljko Serdar, CCRES