All of your essential spending should equal roughly half of your take-home pay with 20 percent (or more) going towards savings - and if it’s not, you can make adjustments to get it there. Once you’ve got a good grasp on your monthly spending, group each and every expenditure into these three categories to see how you’re doing. 20 percent for savings and paying down debt.30 percent for nonessentials (gifts, vacations, entertainment, dinners out).50 percent for housing, bills, groceries and other everyday necessities.Create your budgetĪ good plan for most families is the 50/30/20 budget, which corresponds with your needs, wants and goals: Then track how you spend during the next month, carefully noting if you make any out-of-the-ordinary purchases, like vacations or holiday gifts. To begin, review your monthly credit and bank statements to see where you’ve spent your money over the past six months. How to Write a Will: A Guide for New Parents The problem: If you don’t know how those dollars keep disappearing from your bank account, you’ll probably have a hard time staying out of debt (and you most likely won’t save for that dream retirement). This is the tough part! Most people aren’t sure how much money they dish out every month - and if they are, they usually don’t track exactly where they’re spending it. Before you take the plunge and quit your job, practice living on your partner's paycheck for a while and use yours to pay off debt or save. Plan on being a stay-at-home parent? That means you’ll have to live on one paycheck. In addition to your after-tax salary, does your family take home any other cash? If you write for your hometown website, sell crafts on Etsy or list your home on Airbnb over the summer, add that income to your total for the year and average it out over 12 months. Look to your pay stubs and bank statements to determine your monthly income. But think about what you’ll need down the road a bit: Whether you’re saving for a minivan, a bigger place to live or your child’s college fund, sticking to a plan is easier with a goal in mind. Experts say budgeting is hard for new parents because they tend to focus on the short term instead of the long term.
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