How To Prioritize Spending To Form Your Budget 

At Nevada Title and Payday Loans, Inc., we know the importance of having a clear budget plan to follow every month. It will give you the structure to ensure that all critical financial obligations are covered, all your goals are met, and all your spending is accounted for.

However, if it’s your first time to form your budget, it’s hard to identify which expenses to prioritize. Your budget must be flexible enough to accommodate unforeseen circumstances and financial emergencies such as unexpected medical bills or a job loss.

You should know which expenses can’t be compromised and which ones can be adjusted when money is tight. In this article, learn how to prioritize your spending by following the 50-30-20 budgeting strategy to create an effective budget plan.

How To Prioritize Your Expenses Using The 50-30-20 Budget Plan

According to a 2023 report by Nerdwallet, 74 percent of American adults follow a monthly budget, 84 percent of whom say they often exceed it. When asked which financial areas they prioritize, 48 percent said emergency savings, 36 percent said investments and 35 percent said retirement planning.

Budgets and priorities differ from person to person, so finding a method that best works for you is essential. While there are numerous strategies you can use to help you identify which expenses to prioritize for your monthly budget, we will focus on a popular and effective budgeting plan called the 50-30-20 rule. 

This simple budgeting framework recommends that you allot 50 percent of your monthly income to your needs, 30 percent to your wants, and 20 percent to your savings and debt repayment. Let’s take a look at each category more closely.

50 Percent For Your Needs

After-tax, half of your monthly income should cover necessities such as:

• Rent
• Groceries
• Utility bills
• Gas or transportation expenses
• Insurance
• Minimum credit card or loan payments. Anything beyond the minimum belongs to the savings and debt repayment category.

If the cost of your non-negotiable expenses exceeds the 50 percent cap, you can adjust the budget and “borrow” from the wants category. But if it doesn’t reach the 50 percent mark, you can allocate the extra to your savings.

30 Percent For Your Wants

If you don’t allocate a portion of your hard-earned money for fun, entertainment, or yourself, you’ll find it challenging to stick to your budget. Besides, your wants help keep you relaxed and motivated.

This category may include:

• Non-essential purchases such as clothing, shoes, and bags
• Restaurant meals
• Vacations
• Supplies for hobbies
• Memberships and subscriptions

You can use this money however you want. You may choose to save it for a big-ticket purchase. You may even decide to allocate the funds to your savings or your debts so that they can be paid faster. However, it’s essential that you spend even just a little on yourself, or else you will lose motivation to follow your budget.

20 Percent For Your Savings And Debt Repayment

The remaining 20 percent of your monthly income should be used for saving and paying off debt. You can use the money here to:

• Start or build your emergency fund
• Contribute to your retirement account
• Pay off debt beyond the minimum payment

Putting money regularly into your savings should be a priority, as it’s essential to have access to cash in a financial emergency.

How Can A Title Loan Help With Urgent Needs?

On that note, having a time-sensitive financial obligation and needing more funds to cover it is always tricky. Here at Nevada Title and Payday Loans Inc., we offer a solution to this problem.

If you need fast cash to pay an urgent expense, consider taking out a title loan from us. We welcome everyone, good or bad credit.

Here’s a step-by-step guide for our title loan process:

1. You can drop by one of our many locations throughout Nevada. You can go to our office nearest you to speak directly to one of our loan agents to get the process started.
2. If you prefer something else, you can begin the process by completing the quick form here on our website. Once you submit it, one of our representatives will call you to verify your details and schedule a vehicle inspection.
3. Meet with our representative so he can check the required documents (Valid photo ID and a lien-free vehicle title under your name) and inspect your car.
4. If approved, you will finish the process by signing some papers. You can get the money that same day or the next.

Inquire About A Title Loan Today!

A clear monthly budget following the 50-30-20 rule allows you to cover all essential financial areas - your needs, wants, and savings. Knowing which expenses to prioritize is critical for the budget to become effective.

If you are in a financial emergency, contact Nevada Title And Payday Loans, Inc. for an urgent title loan. We're here to help!

 

Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.