There’s no shortage of budgeting and spending rules when it comes to personal finance. One says you shouldn’t spend more than 30% of your monthly income on housing. Another says to always save 10% of your income. Don’t take more than 4% out of your retirement nest egg. And then there’s the golden ratio budget. Here’s why Morningstar says you should consider this strategy.
A financial advisor can help you create a financial plan for your needs and goals.
This budgeting approach breaks down your monthly spending by weighing how much of your gross income goes toward your past, your present and your future.
According to Morningstar, your expenses can be broken down into this financial timeline:
- The past: Paying for things you bought/did in the past
- The present: Funding your current lifestyle
- The future: Accumulating to create future income
- A financial advisor can help you compare different budgeting strategies for your financial plan. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- A key to budgeting is having a good grasp of your financial timeline. If you need help setting goals, this guide breaks down retirement goals by age.