The 50-30-20 budget is simple:
50% of your post-tax income is spent on needs.
30% is spent on wants.
20% is saved/invested.
So if I love it that much, why don’t I use it anymore?
I earn a high income (by my standards – realistically it’s about average in
|One thing that always makes me happy: tending to my begonias.|
That’s the other category for which I won’t follow the 50-30-20 budget. I love saving. It makes me happy. I like knowing that when it’s finally time to replace Perfect Boyfriend’s car, we can pay for it in cash. I like knowing that I can get married without going into debt. I like knowing that if something terrible happens and I lose my job, I’ll have an emergency fund.
What’s more, while I enjoy my job and can’t imagine quitting anytime soon, I know I don’t want to work until 70. I look forward to the first day of official retirement, when I can wake up at a natural time for my body, take as long as I want to eat breakfast and go for a three hour walk before lunch.
There are plenty of blogs out there about early retirement, and from what I can gather, a savings rate of 50-75% is essential. So if I settled for a savings rate of 20%, what would happen to me if I got to 40 and wanted to retire? I’d have to keep working! That’s no fun. I like knowing that I have enough money saved to give me options for what I do with my life. This is why I believe your savings rate should be much, much higher than 20%. I’ve set myself a goal of saving 45% of my income in 2013, and I can’t wait to tell you on December 31st that I’ve achieved it.
Coming next Friday: My 2013 Budget Part Two