ScaredyCatGuide's Personal Finance Allocation Tip
A personal finance tip for how to allocate income, the buckets I use and the percentages that go toward each.
It's a video I did some time back, here is what I lay out:
Income Allocation
55% towards living expenses (mortgage, food, utilities, etc.)
20% toward long-term savings/rainy day fund (for emergencies or replacement of large ticket items)
10% for investing/passive income creation (investing in and acquiring income producing assets)
10% for fun time money (pure discretionary income to spend on anything you like!)
5% for learning and getting better (taking a class or a course, i.e, learning something new)
(^ awesome t-shirt, right?)
This is a ratio I learned some time ago, maybe it works for you maybe it doesn't. Additionally, if you are an entrepreneur you likely have the investment bucket juiced up. The above allocations are more designed for a typical household.
I like the separation between savings and investing! I had only recently started to see it this way!
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Yeah, me too!
Trying to get my son to wrap his head around this concept, but kids these days live for today and not tomorrow....nice post.
Thanks bro, yeah man. I think we all wish we would have embraced these things at a much younger age. He'll learn at some point ;-)