This budgeting strategy divides the money you make into three categories. Picture: Pexels
During periods of economic instability and rising costs, it is more crucial than ever to have a solid financial strategy in place.
The 60/30/10 budgeting method is a useful tool that can help your rands last longer, even during times of severe inflation.
This budgeting strategy divides the money you make into three categories: 60% for necessary costs, 30% for discretionary spending, and 10% for savings and debt repayment.
Senior deals strategist at Bountii, Jason Higgs, outlined that by adopting this balanced approach, you can ensure that your most essential needs are met while still allowing for flexibility and planning for the future.
– 60% of your salary goes into necessities such as housing, utilities, groceries, and transportation. These are the non-negotiable expenses you must pay on a monthly basis.
– 30% of your salary is set aside for discretionary expenditure, which includes entertainment, dining out, travel, and other non-essential items.
– 10% of your income goes towards savings and debt payments.This component assists you in creating a financial buffer for unexpected bills, emergencies, and long-term goals such as retirement or a down payment on a home.
Financial stability
By prioritising necessary expenses and maintaining a balanced spending strategy, you can reduce financial stress and ensure that your basic needs are continuously covered.
Reduced stress
When you have a clear budget, you don’t have to worry about unexpected expenses or overspending. This can result in better mental health and overall well-being.
Achieving long-term financial goals
The 10% set aside for savings and debt repayment can help you make progress towards your financial objectives, such as creating an emergency fund, paying off debt, or investing for retirement.
Track your expenses: Keep track of where your money goes each month to ensure that you are staying within your budget and spending monies correctly.
Prioritise needs above wants: When making purchase selections, consider whether an expense is a genuine need or simply a wish. This might help you focus on your critical costs while avoiding overspending in the discretionary category.
Change your spending habits as needed. As your financial status or objectives change, be prepared to adjust your spending patterns. Regularly examine your budget and make any required changes to keep it functional and current.
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