Archive for savings

The 50/20/30 Rule of Budgeting

by Whitney Hufnagel, Heritage Trust

Life is all about making decisions. From the time you wake up each morning to the time you go to sleep each evening, you will have likely made hundreds of decisions. Most daily decisions seem small and routine, and every now and then a major life decision is sprinkled in the mix. Most of us can probably agree that it is easy to see how major life decisions can have a large impact on our financial situation, but how many of us realize the compounding effect these seemingly small daily decisions can have on our ability to reach our financial goals?

Our daily decisions, whether good or bad, help form habits. The habits we create have the ability to carry us successfully towards or destructively away from our goals. Creating a budget is just one tool that can help foster and maintain healthy financial habits. Budgets allow us to make sure we are spending our dollars wisely and in a manner that is appropriate for our unique situations and interests. Often times, people don’t attempt to budget or give up on budgeting because it can be time consuming, confusing, boring, unrealistic, or feel too restrictive; however, used in the right way, a budget can be very powerful and aid in daily decision making.


The article below discusses a simple 50-20-30 rule to budgeting that may make budgeting easier for a novice and quicker for a pro. Simply put, 50% of your income should go towards living and essentials, 20% should be allocated towards financial goals, and 30% should be allocated towards those things you want but don’t need. As the article mentions you can adjust the percentages in a way that fits your unique situation. However, try not to reduce the 20% allocation toward financial goals. If anything, increase that allocation.

Please remember, this is a rule of thumb and does not ensure financial success. It is simply a tool that can help you determine whether your decisions and habits are financially healthy, help you identify areas of improvement, and help you maintain a level of awareness to make sure you are spending your dollars in an enriching way for your unique lifestyle. If you would like to discuss budgeting or financial planning in more detail, please contact us to see how we can help you.

New to Budgeting? Why You Should Try the 50/20/30 Rule –

If you’re new to budgeting, figuring out how to manage your money each month can feel overwhelming. Not only do you need to organize, but you also have to make difficult decisions about how to spend your cash. Relying on the experiences of others can help only so much, because your income and expenses are unique. Someone may be able to spend $2,000 per month on rent in Arlington, VA, but that kind of spending may not work for you.

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The Wedding Metaphor

by Whitney Hufnagel, Investment Analyst

After five years of dating, Kevin finally asked me to marry him. I was so excited to start planning the next chapter of our lives and the wedding I had dreamt of since I IMG_9974was a little girl.

While mostly enjoyable, the wedding planning came with some challenges. We knew sticking to our budget would be difficult to accomplish a traditional Catholic wedding ceremony followed by a reception with dinner, drinks, and dancing with a large guest list. Therefore, we started by prioritizing what was most important to us which helped us define our wishes and compromise where needed.

Adequate time allowed us to carefully plan every detail at the best possible price. Planning also helped us identify and calmly navigate minor obstacles which included finding the perfect baker upon learning our original choice was already booked as well as finding a more suitable photographer after receiving lackluster engagement photos. However, neither of us truly realized the complete value of all the planning until our wedding day arrived. Our blueprint provided organization, a sense of security, and allowed us to achieve our goal of having a stress-free wedding day where we could focus on one another and our journey all while being able to fully engage in celebration with family & friends.

Just like the time spent planning a wedding can help pull off a successful wedding day, creating a comprehensive financial plan can help pull off a successful financial future. While the size of your wealth helps determine the time and resources required to build and update a comprehensive financial plan, it is never too early to start and no asset size is too small to benefit. As with wedding planning, financial planning helps couples and families prioritize how to allocate money to achieve dreams and goals. Planning also helps make sure all involved are on the same page and compromise when necessary.

Being proactive with planning and making appropriate updates creates an opportunity to identify warning signs and make corrections before it’s too late and
provides ample time to make better informed decisions. A financial plan can help ease concern when it comes to investment returns and taxes and has the power to put all the pieces of your financial puzzle together to help build and ensure sustainability. Like planning a wedding, the value in a comprehensive financial plan is often seen in hindsight, but you will be pleased you invested your time and money on your financial blueprint.

Photo courtesy Horton Studios