I tend to see myself as a spender so I always seem to think I am spending too much on wants. But, according to the 50/30/20 (needs/wants/savings) rule, I am not even close...
My ratio is more like 37/19/54 and is going to be 55/27/19 once we have the house (401(k) doesn't get counted in this formula because its after tax and we will start maxing that in January).
The reason this is kind of important is because I feel guilty that we spend so much on our entertainment right now and especially guilty that was/am planning to raise the amount after we get a house.
I need to stop feeling guilty and just enjoy the fact that we have completely cleaned up our act. Not being allowed to spend anything on myself in college is part of the reason we went nuts after we got our careers started.
The weird part is that I have checked this formula before but I guess I was convinced that I was somehow out of balance again.
Do I plan on eventually raising the savings amount? Most definitely, but for now maxing out the 401(k) and saving 20% of my after tax money is perfectly fine.
Need to remember its okay to enjoy life...
October 3rd, 2008 at 10:10 pm
October 3rd, 2008 at 10:36 pm 1223073369
There's some half-way reasonable stuff I want. I think I can actually afford it. It would even fit my budget, but for some reason, I'm just really reluctant to buy it. I just don't know how things will end up next week or whatever, and I don't want to do that.
October 3rd, 2008 at 10:48 pm 1223074126
October 5th, 2008 at 03:39 pm 1223221157
I was curious, so i applied it to my expenses, taking the month of September as an example. Of course, there is some subjectivity involved in deciding what's a "need" and what's a "want," but i think i was fairly objective. I cam up with 75% needs/5% wants/19% savings.
I always track my monthly expenses, so i know that the only "wants" i spend on are these categories: "Bird watching," "Gardening," "Entertainment," "Dining out," "Clothing" and "internet."
And i included my extra mortgage prepayments as "savings" since i do believe that's what they are.
October 5th, 2008 at 04:16 pm 1223223369