Blog Contributor: Beverly Wilks: Take control of your future by effectively managing your money.




Take control of your future by effectively managing your money.

Contributed article by Beverly Wilks, tech marketing executive, financial literacy champion and blogger at Bacon & Heels.


When it comes to money knowing where you stand and having an idea of where you want to go is key to managing your financial future.


Budgeting is certainly an important part of your finance journey, and in a recent study 61% of women shared that they are nervous or lack confidence in their money management skills, so they shy away from taking a closer look at how they spend and save.


First things first, I don’t like the word budget, so let’s change the word ‘Budget’ to ‘Spending Plan’.


Creating a spending plan is not as complicated as you may think! It can help you get out of debt, track your savings, gain financial independence and help you to stop overspending.


So where do you start? I recommend that you have a monthly spending plan, this way you can track your expenses and save consistently and spend purposefully. There are no fast and concrete rules for how you should budget, or track your money, so I use the 20-50-20-10 Spending Plan.



What is the 20-50-20-10 Spending Plan?

The 20-50-20-10 Spending Plan is a really easy way to organize your spending, and savings, so that you can ensure that each dollar you spend has a unique purpose.


This spending plan can help you with your money goals by effectively helping you to manage your net monthly income by dividing your spending into 4 categories: Saving, Essential Expenses, Debt Repayment and Fun.


Here is how the guideline works:


  • 20% goes toward Savings. This is for general savings, emergency savings, investing, etc. Remember to pay yourself first every payday.

  • 50 % goes toward Essential Expenses. No more than half of your pay should go toward your necessary expenses, including housing, transportation, utilities, and groceries.

  • 20% goes toward Debt Repayment.

  • 10% goes toward Fun. Your fun category can include gym fees, hobbies, personal care, eating out at restaurants, and other miscellaneous expenses.

Here’s an example: if your net take home pay is $4,000 a month, here is what your spending plan would look like:

  • Savings: $800

  • Essentials expenses: $2,000

  • Debt repayment: $800

  • Fun: $400

20% is for Paying Yourself First

David Bach, the author of the Automatic Millionaire, famously coined this phrase and in his books, he encourages everyone to pay ourselves first.


Yes, your read correctly, before you pay your rent, before you pay a single bill, YOU get paid first. People typically pay all their expenses first, and then save what is left over.


Paying yourself first flips this thinking around so on each and every payday you save 20% of your take-home pay into a separate savings account (extra points if you place these funds in a high interest savings account), then you pay your essential expenses, debt and fun categories.


50% Goes Towards Essential Expenses

In this category, 50% of your net income should be earmarked for all your essential expenses. These expenses can include:

  • Rent/Mortgage

  • Groceries

  • Utilities (heating, electricity, mobile phone, etc.)

  • Insurance

  • Transportation

  • Child care

Depending on where you live, you may spend more than 50% of your monthly budget on essential expenses. If this is the case, take a closer look at your fun category and see if you can reduce the spend in this category.


20% Goes Towards Debt Payment

Debt repayments is key when you are on the road to financial independence. Use 20% of your after-tax income to pay down your debt.


I know how hard it is to pay off debt, but the sooner your debt is eliminated, the sooner you can reroute these additional funds toward savings, building an emergency fund, upgrading your home, or whatever else you may choose.



10% is for FUN

Every budget should allocate money toward doing the things you enjoy. Savings is key, but we need to have some balance and fun - because after all, life is for living.


In this category you can include entertainment (AppleTV™, Disney+™, Netflix®), shopping on Amazon, take out and dinners, etc…


The bottom line

Creating a spending plan is a fist step in taking control of your finances. Remember that you are unique, and everybody’s money situation is different, so having a spending plan can be the perfect way for you to balance your money, promote financial wellness, and build your financial confidence.


Check out the interactive spending plan calculator on www.BaconHeels.com and to learn more about how you can build your financial independence follow or DM us on Instagram at @Bacon_and_Heels


To learn more about Beverly, we did our "Power 5" interview with her in September 2021 - you can read the full blog post HERE.


Thank you for your contribution Beverly!


Contributed article by Beverly Wilks, tech marketing executive, financial literacy champion and blogger at Bacon & Heels.

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