When it comes to budgeting we all have to start somewhere. Maybe you've never had a budget before or have unhealthy financial habits and have found yourself in overwhelming debt. Maybe you write down all of your expenses but you never seem to see your savings account grow.

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This is where the 50/20/30 Rule comes in. It's a great personal finance tool that can act as a starting point for getting your accounts in order. It was one of the first steps we took in working our way into the 800+ Credit Score Club and I wrote about it in my Amazon bestseller,The Beginner's Guide to Budgeting. (This post contains affiliate links. Please read my Disclaimer for more information.)

One of the first things you should have before starting this method is an accurate amount of expenses so that you can properly sort them into each section. You can track these in a old school notebook or use something a little more specialized, like this expense tracker book. I like that it's roomy enough that you can label expenses as fixed or flexible.

There are different definitions for what costs should fall under each number. For simplicity's sake we'll say that 50% of your take home pay should be on fixed expenses, 20% on savings, and 30% on flexible expenses.

The 50/20/30 Rule Example:

Income after Taxes: $3,500 (50%)

Mortgage/Taxes/Insurance $900

Car Loans $300

Subscriptions $10

Phone & Cable$100

Student Loans $250

Auto Insurance $160

Total: $1,720 (49%)

20%

Roth IRA Contributions $350

Emergency Fund $100

529 College Savings Plan $285

Total: $735 (21%)

30%

Groceries $400

Eating Out $150

Gas $100

Haircuts $20

Entertainment $200

Hobbies $180

Total: $1,050 (30%)