What Is the Best Budgeting Method?

Mortgage brokers should have a broad understanding of the various budgeting methods available to their clients. Budgeting is not a one-size-fits-all task and various clients may find that different methods work best for them. However, the 50-30-20 budget method is widely relied on throughout the world by individuals looking to take control of their finances. 

You can easily walk your clients through the 50 30 20 budgeting method by following these steps:

1. 50% of your client’s after-tax income will be allocated to the most important expenses: bills, repayments, personal care, and familial obligations
2. 20% of your client’s after-tax income will be allocated to their desired savings funds: retirement, emergency, and purchasing or renovating a home
3. 30% of your client’s after-tax income will be allocated to anything else they may purchase or set money aside for: entertainment, personal care purchases, and spending money

For clients that are looking to save a lump sum of their income, the 50 40 10 budgeting method may be the best option:

1. 50% of your client’s after-tax income will be allocated to the most important expenses
2. 40% of your client’s after-tax income will be allocated to their desired savings funds
3. 10% of your client’s after-tax income will be allocated to purchase anything else they may need or want

Creating a successful budget can allow your clients to have more financial freedom and accurately monitor their financial statuses. Budgeting is highly recommended for all individuals because it gives them the chance to create and work toward their independent financial goals while improving on the areas that need work.