- It’s important to differentiate between needs and wants when assessing monthly expenditures.
- The 50/30/20 rule is a helpful way to allocate income: 50 percent for needs, 30 percent for wants and 20 percent for savings or debt repayment.
- Cover essential needs like housing, utilities, groceries and health care before discretionary spending on wants.
- Adjust allocations based on income or expense changes to stay flexible and aligned with your financial goals.
Credit card debt is something many Americans know far too well. In fact, a recent Bankrate study found that 50 percent of people in the U.S. are carrying a credit card balance, and 58 percent of them don’t have a plan to pay it off.
While true emergencies are sometimes to blame, credit card debt is often a result of deciding to splurge. A surprising 38 percent of Americans say they would be willing to go into debt to have fun. Others unintentionally rack up debt by confusing “wants” and “needs.”
Beth Deyo | Bankrate