After five years of working in education, I now find myself transitioning into a new career in the wealth management sector. That means hitting the reset button on my personal budget.
Creating and maintaining a budget can feel intimidating no matter where you are in life. If you’ve set your budget aside because it felt overwhelming, let me introduce you to a simple, proven framework: the 50-20-20-10 rule.
Needs – 50%
The first 50% of your after-tax income should go toward your needs. No, this doesn’t include golf outings or spa days (we’ll get to those later). Needs include essentials like:
- Housing
- Utilities
- Groceries
- Insurance
- Minimum debt payments
Basically, these are the non-negotiables in your life—the things you couldn’t go without or would face serious consequences for missing. Start by listing these unavoidable monthly expenses.
Wants – 20%
The next 20% of your budget goes toward wants—the things that improve your quality of life. This may include:
- Hobbies and entertainment
- Dining out
- Streaming services
- Travel and leisure
- Shopping and non-essential purchases
Be intentional with these expenses, but don’t feel guilty about them. A healthy budget makes space for joy and refreshment, too!
Savings – 20%
This is often the most challenging category: savings. Aim to set aside 20% of your income toward:
- An emergency fund (your first priority)
- Short-term goals (e.g., a down payment on a home or a new car)
- Long-term investments
- If your employer offers a 401(k) match, consider maximizing that benefit — it’s essentially free money.
Giving – 10%
For many families, generosity is more than just a financial decision—it’s a reflection of their values. Setting aside 10% of your income for giving allows you to make generosity a planned and purposeful part of your budget. This may include:
- Tithing to your local church
- Supporting ministries or charitable organizations
- Giving to causes that reflect your values
Match Your Lifestyle
Let’s be real: sometimes simple percentages aren’t realistic. High rent or student loan payments may mean your needs exceed 50% of your take-home pay. If that’s the case, try to cover the difference by reducing spending in the wants category, rather than sacrificing your savings.
A Higher Purpose
Jesus often spoke about money—not for its own sake, but to point us toward something greater: the Kingdom of Heaven. One of my favorite verses on the topic is Luke 16:11:
“So if you have not been trustworthy in handling worldly wealth, who will trust you with true riches?”
At Harvest Point®, we believe your budget should reflect the values you hold dear. Whether you’re just beginning this process or trying to refine your next steps, we can help you build a plan that honors your priorities and aligns with both your short- and long-term goals.
If you’re not currently working with an advisor, we invite you to fill out our Discovery Questionnaire to schedule a 30-minute introductory call. We’d love to talk with you about your legacy, values, and goals—and explore whether Harvest Point® is the right fit to help you accomplish them.