One budget plan is called the sixty percent plan. This plan is relatively simple, and works for people who do not like to track individual categories or numbers. It may not work as well for people who have smaller incomes. The plan is pretty basic and straightforward.
The plan is to live on sixty percent of your gross income. This should include all living expenses and your taxes. You would need to keep your grocery expenditures, rent, and car payments well below this amount so that you can still cover your other expenses during the month.
You will then divide the rest between different savings accounts. You should put ten percent into an emergency fund savings account, ten percent towards retirement, and ten percent towards a permanent savings account. The other ten percent will go into a fun savings account. You can use this account to save for family vacations, the new boat you want, or other fun expenditures.
If you make $75,000 a year, your monthly pay will be about $6250. You will then take sixty percent of this, or $3750 to cover your monthly expenses. You will then transfer the other money into your savings accounts. This works well for people with a larger income. If you are careful not to overspend anyway, this plan will be good for you. It can also help you to build money quickly.
If you only make $25,000 dollars a year your monthly salary would be $2083. If you followed this plan you would need to keep your monthly expenses below $1250 a month. This would be very difficult to do.
Another disadvantage to this plan is that it does not help you to fix bad spending habits or help you to find areas that you can save money. If you are constantly using credit cards this plan would not work well for you.
This plan can work for some people. I think that those who are well off would benefit from following this plan, because wealth building is automatically built into the system. However, if you are struggling to find enough money in each paycheck, you may want to consider another budgeting system.