Thursday, 12 October 2017

The Simplest Budget



Delicious meatloaf cooked from scratch



Hi Folks

I think this is the simplest budgeting model ever. We use it here at the HM household and it delivers excellent results. It simply is this:

Using your net income, allocate strictly in this order:

The Ideal Budget


1. 20% Invest
2. 60% All living expenses and commitments
3. 10% Saving for large purchases
4. 10% Spend on whatever you want


If you have consumer debt, then use this version of the budget:

The Debt Busters Budget

1. 20% Extra Debt Payments
2. 60% All living expenses and commitments 
3. 10% Emergency Fund
4. 10% Spend on whatever you want

Once debt has been cleared, revert immediately to the Ideal Budget.

The obvious challenge about this Ideal Budget and its sister version the Debt Busters Budget is the necessity to live on 60% of whatever your income source is. Do not dismiss it as impossible. Many, many folk achieve this or better, even on very small incomes. This is where we must allow our minds to be inventive and seek solutions (this is what our minds do best actually). Living on 60% of our incomes is fully supported by the simple living community world wide who actively and practically share all their tips, tricks, support and encouragement with astounding generousity.

Actually, this simplistic post is probably THE single best practical money advice I can ever share.


Take care folks and stay nice.

Mr HM (Phil)

9 comments:

  1. I think your budgets are both realistic and achievable.
    Do share that meatloaf recipe, it looks srumptious.

    ReplyDelete
    Replies
    1. Mrs HM is getting this recipe for you. We'll post it here soon.

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    2. Thankyou Phil I will give it a go for sure.

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  2. Phil,
    I loved this simple algorithm

    ReplyDelete
    Replies
    1. It is so easy to remember too. Budgeting by percentages was the best change I ever made. I automate the 20% and can mentally figure the rest on the fly

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  3. This month I'm trying to live on 50% of my salary. Yours is more practical.

    ReplyDelete
    Replies
    1. We have done 50% before and whilst it was financially excellent it felt too dull for us and made us despondent. Our sweet spot is 60%. Everyone will have their tipping point depending on their person preferences and state of mind. We will still do 50% for short periods to meet a goal but we can't emotionally sustain it - you are clearly much more disciplined! Good on you!

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  4. Thank you for sharing this, Mr. HM. I like how simple this is and I'd like to see what those percentages look like, in dollar terms, with our net income. Meg

    ReplyDelete
    Replies
    1. I have a little spreadsheet that automatically calculates it too. Happy to email it to you if you want. Just pop me an email (my email is in the 'contact Mr HM' tab up the top of the blog page)

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