April is Financial Literacy Month. In honor of that, we’ll be sharing one financial tip a day to help you better manage your finances and get more for your money, starting with spending habits.
When it comes to spending, that number is just as important as your bills and savings combined. Why? Because planned spending serves your finances far better than unplanned spending and if you aren’t getting enough pleasure out of life, at some point you’re going to wonder what you’re working for. So, how much should you spend? Good question!
The 50/20/30 rule suggests that flexible spending should be around 30% of your income after taxes. Flexible spending is any funds that are spent on things with varying amounts, like groceries and gas. But, you should always count on using some of it for entertainment, like dining out or going to the movies.
Of course, the numbers are somewhat flexible. If you only put 20% of your income toward flexible spending and you’re happy with that, leave it as-is. However, if you simply can’t get 30% out of your income to spend, you might want to consider taking an hour or so to see where your money is really going, or diversifying your income so you have more room for the pleasures of life.