The Ultimate, Easiest Budgeting Hack for Millennials

Budgeting sucks. I know. Well, I think it's more-so the word budget that makes most people cringe. The word makes you feel like you're in a neck strangle with your money. But whether you make $8/hr or $100,000 a year, you need to know exactly what you’re doing with it.

So I'm going to call it bucketing. People over-complicate the process of preparing a budget, and that discourages so many from actually doing it. The easiest method for me is to just break up my money into three simple buckets… and then put my life inside of them. 

Bucket #1  |  50 % Necessities

This is where you put all of the things you absolutely need in order to live. 50% of your income will go toward these things. I’m talking about, can’t-go-a-month-without-paying-or-you’re-in-trouble type of necessities. This includes your rent, car note, car insurance, utilities, etc. 

It makes sense that you’re using the highest percentage of your income for these essentials, or your fixed expenses.  These expenses usually won’t change from month-to-month. You’re more than likely paying the same amount every time. Where most people fall short is over budgeting for this bucket. 

Let’s say you make $1,000 a month. Your rent, car note, insurance, AND utilities, should be $500 or less in total. Renting an apartment for $500 a month is living above your means if you have a car note, and other fixed expenses to pay.  

Bucket #2  |  20 % Priorities

This category is for things that are very important, but won’t impact you quite as much as the bare necessities. 20% of your income goes towards these things. In this bucket, put stuff like savings, 401k/ retirement plan money, student loans, credit card debt, and other long term expenses you need to pay off. Don’t neglect your debt and savings. It is extremely important to include them in your budget for emergency circumstances and to maintain good credit. Plus, it’s good to reach your financial goals - makes you feel accomplished!

Bucket #3  |  30%  Freedom Funds

The last 30% is for variable expenses that may change based on your lifestyle. In this bucket, put things like your groceries or food expenses, cable, internet, cell phone plan, entertainment, gym membership, pets, traveling, shopping, and other miscellaneous expenses that are a part of your lifestyle. Don’t. Miss. ANYTHING. Account for as much as you possibly can.  

There’s no rule saying that the 50/20/30 Rule this is the holy grail of budgeting. There's also no rule saying you have to follow these exact percentages. Make it work for you. It's a simply great method to get an idea of what it means to live within your means. Budgeting doesn’t have to be an overly complicated thing. Once it becomes too intricate, you'll get overwhelmed and stop following it. Bucket out your money, and then sort your life into those buckets. 

Being on a budget doesn't have to mean being cheap. But it does mean that you work hard for your money… so you're choosing to make your money works for you!

Be Easy, 

Erin