Richard Jenkins at MSN Money has developed what he believes is a simpler way to save. Fed up with budgets that were a burden to implement, Jenkins came up with his own easy method to determine how much should go where each month.

What you’re trying to do with a budget is to prevent overspending, which ultimately leads to piling up debt. Contrary to the way most people budget, however, it rarely matters what you’re overspending on — dining out, entertainment, clothes. Who cares? It’s still debt, right?

Jenkins proposes that your budget divide gross monthly income as follows:

  • 60% to Committed Expenses such as taxes, clothing, basic living expenses, insurance, charity (including tithe), and regular bills (including things like cable).
  • 10% to Retirement.
  • 10% to Irregular Expenses such as vacations, major repair bills, new appliances, etc.
  • 10% to Long-Term Savings/Debt — money set aside for car purchases, home renovations, or to pay down substantial debt loads.
  • 10% for Fun Money to be used for dining out, hobbies, indulgences, etc.

Jenkins believes that the best way to relieve money pressure is to reduce Committed Expenses: cut the cable TV, spend less on clothing, reduce your housing expense.

For a lot of people, part of the difficulty in reducing committed expenses comes from the need to make big monthly credit card payments. If you’re carrying a substantial amount of non-mortgage debt, I’d suggest using the 20% that would otherwise go to retirement and long-term saving to aggressively pay down your debt — but only after you cut up those cards.

His advice is excellent. I’m curious to see how my finances fit his 60% solution.

(The actual article has a nifty calculator that lets you play with numbers. You can enter your gross income, and then adjust allocations to the various categories to see what happens to the numbers. Give it a whirl!)

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