You may be wondering what exactly are money boundaries. Put simply, they are rules you set in place to balance the relationship between your finances, your loved ones, and yourself. Setting boundaries with our money has the potential to make our lives happier and healthier.
The basic rule is to divide up after-tax income and allocate it to spend: 50% on needs, 30% on wants, and socking away 20% to savings. 1 Here, we briefly profile this easy-to-follow budgeting plan.
Puts You in Control
Budgeting can help you gain a feeling of control over your money. It allows you to prioritize your spending, track how you are doing, and realize when you need to stop. It puts a solid plan into place that is easy to follow and gives you the chance to plan and prepare for the future.
How to Make a Budget in Six Simple Steps
Boundaries can be emotional, physical or even digital. Some examples of personal boundaries might be: I'm cool with following each other on social media, but not with sharing passwords. I'm comfortable kissing and holding hands, but not in public.
Four Tips on Setting Money Boundaries with Family and Friends
You take your monthly take-home income and divide it by 70%, 20%, and 10%. You divvy up the percentages as so: 70% is for monthly expenses (anything you spend money on). 20% goes into savings, unless you have pressing debt (see below for my definition), in which case it goes toward debt first.
Most articles and financial experts recommend the “30% rule,” spending 30% of your gross monthly income (before taxes) on your monthly rent. That means, if your income is $4,000 per month (or a $48,000 annual salary), then you should be paying $4,000 x 0.3, or about $1,200, on rent monthly.
10 Ways to Stop Living Paycheck to Paycheck
Financial habit #1: Regularly review and update your financial plan. Financial habit #2: Set financial goals that are meaningful. Financial habit #3: Create a budget and use it to guide your spending. Financial habit #4: Find passive income to improve your income.
Follow these strategies for taking control of your finances right now.
You should save money for three basic reasons: emergency fund, purchases and wealth building.
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