One of the challenges of being a single parent is managing your finances in an effective and efficient manner. If you are concern about your finance, then Elizabeth Warren’s ‘50/30/20 Rule’ may be of interest to you.
A Harvard bankruptcy expert and a US Senator and her daughter, Amelia Warren Tyagi co- wrote the book “All Your Worth: The Ultimate Lifetime Money Plan”.
Here is how they recommend you organize your budget;
- Calculate your Income after tax After paying all the taxes, this is the amount, you receive in your pocket.
- Limit your ‘Needs’ to 50 percent of your income after tax Your needs would be necessities such as housing, transportation, utilities, and groceries.
- Spend 20 percent on Savings and Debt Repayments These are financial planning priorities and would include saving for emergencies and retirement, paying off personal debt while thinking of long term financial goals.
- Restrict your ‘Wants’ to 30 percent The remaining 30% can be spent on your lifestyle choices. These are fun activities such as holidays, tech gadgets and entertainment.
This is one of many ways to organise your finance. So that you can manage your finance and budget it efficiently.
Written by Sajid Syed of On the Spot Accountants. If you need any help with tax and accounting issues, please contact him at sajid@onthespottax.co.uk
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