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If Your Budget Isn’t Working, Here’s Why

Haley Paskalides  |  May 22, 2024

If your budget isn't working, we break down the best budgeting framework for today’s economy and ways to make budgeting fun, with Sean Pyles.

Is your budget working? The 50/30/20 budgeting rule — one of the most popular budgeting methods that has been around for 20 years — was created by Elizabeth Warren (yes, that Elizabeth Warren) and has largely been seen as the “gold standard” of budgeting ever since. Essentially, it says that half of your income should go towards “needs” (rent, car, etc.), 30% should go towards “wants” (vacation, flights, streaming services), and the remaining 20% is for your emergency fund and retirement accounts. 

But does it still work for today’s economy, when inflation is running rampant and even a crappy house costs $1M? Maybe not. Thankfully, we have options. One of them is reverse budgeting, which we use in our Finance Fixx program, and has helped our participants save an average of $1,500. The point is, we get to choose the best budgeting method for our lives, and it may be time to make a new choice — especially when our budget isn’t working the way we need it to. 

headshot of Sean Pyles wearing green and smiling at the camera.This week, we’re talking about 60/20/20 budgeting with Sean Pyles, host of the Smart Money podcast. He shares why he thinks this budget is a better framework to follow, and how we can all make budgeting just a little more fun.


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Another option? The 60/30/10 budget is often the one touted by financial advisors, and may be the new 50/30/20, especially if you live in a big city like New York or Los Angeles. That’s because, according to Moody’s Analytics, our incomes have only risen by 77% since 1999, while rents have risen almost double that — 129%. 

Pyles says there have been several moments in his life when he spent half his income on rent. “So in that case, you can adjust these categories in a way that works for you,” he says. “60/30/10 might be more realistic, and 60/20/20 might be even better, where you allocate 20% of your income to wants, and then 20% to debt payments and savings.” 

Pyles also stresses that it’s important to make sure at least 10% of your monthly take is going towards savings — not savings and debt. That’s because if you’re allocating only 10% between extra debt payments and savings, you may not have enough to cover emergency expenses that pop up. To do this, he advises taking advantage of areas where you can cut costs like relocating to a more affordable apartment or couponing at the grocery store and drugstore. 

LISTEN: Budgeting For Your Closet

“Couponing is something that I don’t think gets enough credit nowadays,” Pyles says. “At the end of the day, it’s about finding out where you are spending the most amount of your money in your needs category. Then, figure out where you can shave off a little bit of money that will add up over time to give you more to put towards your wants and savings.”

In Mailbag, we hear from someone who’s in the market for a car and is wondering if now may be the best time to buy an EV. We also hear from a listener who is looking for strategies to consolidate her credit card debt to lower her APR.


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The HerMoney podcast is supported by      Edelman
All advisory services offered through Financial Engines Advisors L.L.C. (FEA), a federally registered investment advisor. Results are not guaranteed. AM1969416

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