Trying to figure out how much you should save, invest, and spend is a daunting bridge to cross. If you don’t even know where to start, you’re not alone. Only 30% of Americans have a long-term financial plan that includes savings and investment goals according to the Bureau of Statistics.

Over 80 million millennials have nothing saved because budgeting money is scary and stressful. However, managing money doesn’t have to be an arduous task.

You might be familiar with the popular 50-30-20 method of budgeting. This is a plan that encourages people to allocate 50 percent of your paycheck to needs, 30 percent to wants, and 20 percent to savings. People often use this method as a guideline to start budgeting and thinking about how to manage their money.

Since this was such a popular method of budgeting, it got finance gurus thinking about how they could make this even more efficient. With cost of living, wages, and finance as a whole changing all the time, there was room for improvement in this plan.

The Barefoot Investor, Scott Pape, came up with the 60-20-20 method to help cater to people who want something slightly different.

How do you do it?

Scott suggests that 60% of your paycheck should go to essentials, 20% on financial goals, and 20% on wants/frivolous spending.

Of course, these numbers are simply a guideline to get you started and it is encouraged to edit these percentages as you learn more about the method of budgeting that works for you.

The breakdown for the 60/20/20 budget looks like:


  • 60% essentials– rent/mortgage, groceries, utilities and transportation
  • 20% financial goals – debt reduction, emergency fund and investments
  • 20% wants – entertainment, travel and eating out

Let’s say your monthly take-home income is $5,000. According to this plan, that would leave you with $3,000 for essentials, $1,000 for financial goals, and another $1,000 for wants each month.

The best part of this plan is that it is easily customizable to fit your lifestyle. Maybe you want to allocate a higher percentage to your goals. You can edit this plan to 60% needs, 30% goals, and 10% spending. Start with the original budget and edit as you go.

An important thing to note is that budgets don’t have to be stagnant.


Our financial situations fluctuate and so should our budget plans. You can change these percentages every couple months depending on what your income, goals, and spending is like at the time. Some months you may be spending or saving more than others, and that’s okay!

The important thing is being aware of these habits and patterns so that you can formulate a proper budget plan around them. The main goal for this budget plan is to be spending 80 percent and saving 20 percent as a starting point.

When you take a step back and review how your money fits into each of these buckets, you will be able to create a smart financial plan catered to your lifestyle.

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