Budgeting is a delicate art in the household. You need to balance expenses with income and ensure that you can still put aside enough to ensure long-term stability. The ideal budget rule is:

  • 50% for all your needs and must-haves
  • 20% for savings and debt repayment
  • 30% on everything else 

As Americans have a high debt level, reaching almost $15 trillion in 2020, it is fair to say that dedicating 20% of your household budget to debt management and prevention (through savings and repayment) is unlikely to be sufficient. Instead, you need to focus on strategies that can:

  • Reduce how much you spend
  • Make your 20% go further
  • Increase the value of your 100%

Tips to Reduce Spending

Reducing how much you spend on essential items and services can serve many purposes. Firstly, it means that the household can maximize what the 50% cut of the budget can buy. So, you don’t have to choose and can buy more of the things you need. Secondly, you can readjust your budget segments and perhaps transfer the unused money into the savings pot. 

How can you spend less without sacrificing your needs? 

You can focus on creating targeted plans, such as a meal plan, to ensure you make the most of what you have. Households that create meal plans tend to save money on their grocery shopping. A meal plan also reduces dependence on food deliveries and restaurants, hence saving costs. 

Another option is to track what you consume already. With energy costs increasing, households need to be aware of the risk of wasting energy. It can be helpful to set up helpful rules at home:

  • Turn off lights and electronic devices when not in use
  • Don’t leave the heating on with the window open
  • Turn down the thermostat by 1 degree to save money without being uncomfortable

Don’t forget to check out the Family Budget Template located in the Resource Library!

Tips to Make Savings Go Further

Savings can take different forms and shapes. If you’re still the kind that relies on savings accounts of piggy banks, it’s time to move to the next levels with trading courses for investment strategies. You can dedicate a small part of your savings to building an investment portfolio that can generate money. Investments can help drive an additional stream of income for your household. 

Not ready to invest at the moment yet? You can still look for savings strategies with a high-interest rate. These are typically fixed term, but they can unlock extra income when they reach maturity. 

Tips to Increase Income

While changing jobs may seem the most obvious option to make more money, it’s not necessarily the easiest path. More and more American households are considering side hustle businesses that can create a secondary source of income to increase the overall available budget. 

Alternatively, you can turn to platforms such as eBay to sell the items you don’t use anymore or don’t want. Many items are also highly valuable despite their age and condition:

  • Collectables
  • Branded items that are not produced anymore
  • Tapping into current fashion trends, such as selling your 1990s and 1980s items

In conclusion, using the 50/ 30/ 20 budgeting rule, you can choose to focus your efforts on improving either of the three categories. Being focused on small but manageable changes is more likely to drive meaningful changes for the whole household. 


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