Friday, June 6, 2008

A budget I like:

from The Automatic Millionaire by David Bach

The main idea: Pay Yourself First!
(Can you tell why I like this guy?)

To make a budget you decide what type of lifestyle you want in the future (i.e. how rich you want to be as compared to how rich you are now) and then use that percentage to save and invest. Then you live on the rest.

Want to live at:
Middle class- pay yourself 5-10%
Upper middle class-10-15%
Rich- 15-20%
Uber rich- at least 20%

Even if you want to be uberrich you just make sure your current costs that you have every month don’t exceed 80% of your income for that month. Does this really work? It seems so easy!

For example:

Average SoCal median income (US Cenus Bureau 2006): $ 70,502 per year
Bringing home (after 30% taxes): $4112.62 per month

Middle class- 5-10%
amount to save: $205.63-$411.26
amount to live on: $3906.99-$3701.36

Upper middle class-10-15%
amount to save: $411.26-$616.89
amount to live on: $3701.36-$3495.73

Rich- 15-20%
amount to save: $616.89-$822.52
amount to live on: $3495.73-$3290.10

Uber rich- at least 20%
amount to save: >$822.52
amount to live on: <$3290.10

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