If you are in the middle of a job transition, or are thinking about making one, budgeting should be towards the forefront of your concerns. When we are thinking about making big decisions that could affect our financial stability it is especially important to make sure our finances are secure. This is why I recommend managing your spending with the 50/20/30 approach.
The 50/20/30 approach is a well-received budgeting tip that suggests you spend 50% of your income on necessities, put 20% into savings, and spend 30% on whatever you fancy. The idea behind this is that you are always saving a decent amount of money, while still allotting yourself enough to survive and even thrive.
The trick with this is to get your necessary spending to, or below, 50%. Let’ say you make $3,000 a month- this leaves you $1,500 to pay rent, pay for food, heat your home, and pay your phone bill- etc. This is do-able, but for many people it means making a couple lifestyle changes. If you have the fanciest unlimited data plan, keep your house at 80 in the winter- and 60 in the summer, and live in a gigantic house- you might have to make some changes. This is where you have to make some hard cuts, really think which day to day expenditures are worth it, and which can be cut back.
From there you calculate what 20% of your income, and you save it. All of it. You do have a little freedom with this, but not a whole lot. This is money that can be spent on extra loan repayments (the minimum payment is considered a necessity). This is your retirement fund, your get out of debt fund, your “I just lost my job” fund. Your goal is not to touch this money until you absolutely need it. Try opening up a separate bank account for your savings, or starting a Roth IRA, or contributing the money to your 401k. Putting your money away in a way where it will do some work for you is the best way to get back at it for making you work.
From here we get to the fun party- the final 30%. This is the money you can spend however you want. If you want a gym membership, to take a vacation, or a nicer TV- go ahead and treat yourself, so long as it does not cost more than 30% of your income. What I like about this, is though it may be less money than you have spent on fun, it is considerably more guilt-free. It does not matter how ridiculous a purchase is, this is your fun fund, so if you want it (and it fits within the budget) go ahead and get it. As long as you stick to the rules your finances will be secure, even if you get an expensive figurine hobby.
To sum up, 50% on your necessities, 20% on savings, 30% on fun. If you budget yourself to this you will watch your net worth grow, while still being able to maintain a happy and healthy lifestyle.