Our Personal Budget Strategy

Many financial pros recommend using the 70-20-10 rule as a successful roadmap to manage your family budget and track expenses. We found what works for us and we employ a slightly modified version of this strategy. Here’s how our budget breaks down:

  • 70% – Living Expenses
  • 20% – Debt, Savings & Investments
  • 10% – Giving

Living Expenses. Some people think it’s impossible to live on 70% of your total income. With planning and discipline, it’s actually quite manageable. By tracking all of your expenses, you know exactly where your money is going and can nearly always find specific categories to save or limit if things get tight. We use Mvelopes to track every expenditure to the penny and analyze all of our expense categories.

Debt, Savings and Investments. Other than our mortgage and a single car payment, we have no debt. However, if you have high-interest debt (i.e. carrying a balance on credit cards), begin by paying down the highest interest debts first. Once those debts are paid, add the additional money to the next highest interest debts and pay those off faster. Build up your savings and emergency fund to cover 3-6 months worth of living expenses. Since we are on track with our financial objectives for debt and savings, we are focused on maximizing our investments.

Giving. We believe in giving at least 10% of everything we earn to charitable organizations. First, we take pleasure in helping other people and making a difference in the world.  We do it out of love for God, never out of guilt. Second, giving is an expression of our gratitude for all that we have. Third, while we need money to live, we are not a slave to it. When we give freely, we are in control of our money. By giving to a qualified charitable organization, we are also eligible to receive a tax deduction.

The 70-20-10 rule provides freedom and flexibility to spend our money how we want and still enjoy ourselves. As long as we follow our plan, we’ll meet our financial goals – pay off all debt in 10 years, build a 3-6 month emergency fund, earn 12%+ annually on our long-term investments, and consistently invest in the lives of others.

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