Start with the template

One of the most recommended ways of budgeting is the 50/30/20 model. The method revolves around splitting your income into three categories, essentials, leisure and future. The 50/30/20 model is a great framework to start working from, regardless if you're setting a budget for the first time or been doing it for years. Change and tweak as you see fit.

The categories

Essentials 50%

The essentials consists of all your recurring monthly spendings, for example:

• Rent
• Bills
• Grocery staples
• Travel costs, bus pass, gas

The essentials category is hard to cut down on, but it is possible. Firstly reassess your services, phone, heating, internet, are there cheaper options? In some cases you might even need to find a cheaper place to live.

Leisure 30%

Leisure is everything that makes the life worth living. Try to use this category fully and spend it on what you think matters the most. For example:

• Streaming services
• Restaurant lunches
• Morning coffee
• Clothing
• Furniture
• Entertainment

To spend less in the leisure category you’ll have to make priorities. Spend your money on what you think is worth it, and avoid the unnecessary purchases.

Future 20%

When you put away money for the future you mostly count with savings, but also loan payments and mortgage. Don’t forget amortizations. Try to keep tabs on the future category since it affects your life long term.

The major changes

If your income and spending don’t add up you’ll need to take a look at your lifestyle. You can only cut down on so many costs and keep it sustainable. The hardest and most significant changes are done by increasing your income. Prepare well before your next salary review for the chance of increasing your pay. In some cases it might be time to change jobs to increase your salary.

The main point is that you have the guard rails to feel comfortable with your own money, so you can spend it on what really matters to you.