Budgeting Can Suck — But You're Probably Doing It Wrong

Budgets kind of suck. The idea of tracking and regimenting your spending can seem overwhelmingly tedious, and it certainly can be. But not all budgets are created equal.

If you’re looking to get your money in order, one of the easiest, most effective ways to organize your finances is by using the 50/30/20 rule. Senator Elizabeth Warren created the 50/30/20/rule for spending and saving when co-authoring a personal finance book with her daughter, Amelia Warren Tyagi: All Your Worth: The Ultimate Lifetime Money Plan.

The rule is a simple, accessible way to understanding how to best spend your cash. By organizing your expenses into three main spending categories, the 50/30/20 rule is a surefire way to getting your spending under control while helping you get closer to reaching your financial goals — all without having to stress over money minutiae.


Read on to learn the simple four steps you need to get started using the 50/30/20 rule in your own life.

Figure Out Your After-Tax Income. If you’re on salary, it’s easy to think of your pre-tax income as your actual income. But this isn’t the case.

Taxes eat up a considerable chunk of a salary. After all the deductions — healthcare, Medicare, social security, federal taxes, state taxes, and in many cases city taxes (being a New Yorker is fun!) — have been taken out, your take-home pay is quite different than the amount you were offered when you got your job. For this reason, it’s important to get a better understanding of what you’re actually making before you start thinking about how to spend it.