As promised when you first signed up for this newsletter, it’s not just about sales and sales leadership. We talk about business as well!

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I remember when I first started making incredible money in sales. Somehow I was still living paycheck to paycheck.

Yes, I put a good amount into some stocks and crypto, but back in 2016 sweet kicks, fine dining, and weekend trips were all my rage.

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A few years later as I started settling down with my wife (then girlfriend) and we started having kids, I had to learn how to better budget my money.

It’s this budget that has helped us successfully navigate the ebbs and flows of my sales income, and even now as an entrepreneur, set us up for success.

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So let’s talk about the 50/30/20 rule!

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What is the 50/30/20 rule?‍

Simple.

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It’s a budgeting rule that says:

50% of monthly income goes to needs.

30% of monthly income to wants.

20% of monthly income to savings.

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Depending on your situation these could change. For example, as I’ve been building my business over the last few months, my wife and I have cut down on our WANTS exponentially.

Now leading up to the launch of my “official” launch of my business this year, we had even done a great job of getting our Needs and Wants down as low as possible to help increase our savings.

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A typical month for us was more like 45/25/30.

However, you might be in a position where you were recently laid off, and now you need to cut down on wants and might not even have enough to cover your savings.

That said, let’s dig into each of these categories and how to measure them.

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Needs‍

You think this might be straight forward, but it’s not.

Or, maybe it is and you and I just have different definitions of what we need.

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I like to bucket things in this category that my family can’t live without. Having a family of 5, that’s not easy, but here are some examples.

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Housing Payment - mortgage or rent

Associated housing costs - property tax, repairs, etc

Car Payments - with working from home we got lucky and are down to just 1 car (saves a ton)

Insurance - car, home, renters, life, personal articles - you get the point

Utilities - I lump all my utilities and my phone bill in here as well

Groceries - this fluctuates, but you have a pretty good understanding of your baseline

House Supplies - not to be confused with furnishings (like a cute wall clock my wife bought from Target last week) but things like TP, paper towels, dish soap, detergent, etc

Baby Supplies - for us this is diapers, diaper creams, lotions, etc

Personal Care - anything you use for grooming and keeping clean, haircuts, gym memberships, etc

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Now this is a small list of what some other needs might be, and writing this on a Wednesday afternoon I may be foggy in the brain and forget a thing or two.

But these are the necessities that no matter what you can’t live without. I mean you could live without soap and shampoo, but it wouldn’t be friendly.

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Wants‍

Now I’d think this one should be pretty easy as it’s just the opposite of your needs. Things you want to have that aren’t essential to your life.

One way my wife and I handled this was that we understood our wants would fluctuate because we didn’t necessarily want a new TV right away.

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We created a high-interest checking account with SoFi that we would put a couple hundred dollars a month into that we would then use for those big purchases when they were ready to happen.

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Of course we bucketed other things in here like:

Restaurants - which included coffee shops and fast food

Clothes - while a necessity, we divided our clothing budgets (think new pair of Jordans versus underwear and socks)

Allowance - both my wife and I allotted a specified amount for each of us to take from each paycheck to allow us to do with it whatever we wanted. Truly a small amount, but something to keep outside of our budget for one-off fun.

Streaming Subscriptions - can you believe we spend over $150 a month on this?

Entertainment - concert tickets, movies, movie rentals, taking the kids to Skyzone, family outings, etc

Toys - yes, if worse came to worst then my kids can play with plastic spoons. Now they never would have to, but you get the point. We actually have one Saturday a month where we go to the toy store and each kid gets a new toy - helps keep the mess down too.

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Depends on how granular you want to get, but this is a great way to find wiggle room in your budget depending on your situation.

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Savings‍

Welcome to everyone’s least favorite section.

It’s hard to save, and it’s tempting to spend your paycheck, but don’t. If I didn’t do what I did many moons ago and started building my savings, I wouldn’t be able to do what I’m doing today.

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So what are some savings categories we should be thinking about here?

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Life Insurance - yes you should have it, because even if you don’t need it because you don’t have a spouse and kids, that won’t be forever.

Investment Accounts - I have an individual investing account I use to play some stock short games, but I also have a Roth IRA account with SoFi that allows me to invest IRA contributions (when I qualify) in long-term options like Mutual Funds.

Emergency Savings - 3 months of living expenses, MINIMUM. I say be safe and shoot for six.

Life Goals - this could be buying a house, having a baby, taking a trip (which could fall under wants if you got picky)

College Savings - if you plan on sending your kids to college, this is vital and you should be doing it sooner rather than later.

Conclusion:‍

Budgeting is a hard task to do. You can even go the extra step and find a great budget tracker on Etsy and use it to track your expenses and do week over week analysis.

I typically spend 30 minutes every Saturday working through my Mint.com account to associate my expenses to the right categories so I can track our spending habits.

Focus on the multiplication of the number, not the number itself. For example, one day I showed my wife how when we changed our shopping habits, our unnecessary Target (why is it always Target) spending dropped by 40%. Now that number was only $180, but the fact that we cut out 40% of unnecessary spending was incredible!

Now is the time to start taking these skills into account. Let me know if I missed something above, I would love some feedback!

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