Re-Think The “50/30/20″
Old wisdom said that you should allocate 50% of your income to needs, 30% to wants, and 20% to savings. Well times have changed, and budgets should reflect that. Moving forward, consider adjusting those numbers to something you are more comfortable with since at the end of the day it is your budget and it’s about your goals and comfort to live with a little less worry.
Reinvent Rent
Speaking of needs, people used to think rent should only take up 30% of your take-home pay. One look at the rental market tells us that’s no longer realistic. Instead, think of this rule as a little more flexible, and spend what you need to get a place where you can be comfortable.
All the Savings
It’s not just an account name anymore. There are a lot of different ways to save and things to save for nowadays. From employee contributions to a Group Savings Plan, to TFSAs, RRSPs and the new First Home Savings Account (FHSA). Optimizing your savings will be crucial down the road, so it’s important to plan now and take advantage of all your options.
Make exceptions
We talked about the importance of planning, but it’s important to let yourself make exceptions. Didn’t stick to it this month? It happens. Financial plans are long-term, so keep your eyes on the horizon and don’t let any bumps in the road discourage you from achieving your goal.
Treat yourself
Put a little something aside each month for something you want. You don’t even have to know what it is yet. But there’s nothing more satisfying than seeing something incredible and knowing that you have a little something saved away for just that moment.
Automate
Automatic authorized savings contributions will help you to budget more easily and give you a clear picture of how much money you have left to spend each month. When you pay yourself first, you’ll always come out on top.
The financial world can be an intimidating place, but if you set a plan, stick with it as best you can and don’t let setbacks get you down, you can get to where you want to be. And if you ever need more advice, RBC advisors are always here to help.
This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.
