Personal Budgeting: The 60% Solution

When working with personal budgeting, the 60% solution is one of the more popular strategies to use. If you successfully implement this budgeting strategy, you can take control of your financial situation. Here are the basics of the 60% solution and how it works.

The 60% Solution

Many budgets try to get you to analyze every expense that you have and stay within a certain spending limit in multiple categories. While some of these budgets work for some people, many people find them too difficult to stick to. With the 60% solution, you are not going to be analyzing each spending category that you have. Instead, you are going to try to keep your committed expenses to 60% of your gross income. 

The Remaining Money

This does not mean that you are going to use the remaining 40% of your income to spend as you please. Instead, you are going to devote this 40% to saving for your future. Ten percent of your income should go to retirement savings. Another 10% should go towards long-term savings. A further 10% should go towards short-term savings that will cover unexpected expenses. With the remaining 10%, you will be able to use this for entertainment or anything that you want.

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