Living Margin Financial Goals

You may have read through the living margin; as a refresher, think of your total income as a pie. With the 20/60/20 personal formula, you’re cutting your monthly household income into three pieces: 

1. Financial Goals 

2. Fixed Costs 

3. Flexible Spending 

With the 20/60/20 personal formula, 20% of your monthly household income goes towards financial goals, 60% for fixed costs, and 20% for flexible spending. 

If you're aiming to allocate 10% of your income towards giving and another 10% towards savings within your living margin budget, here's how you can incorporate these financial goals:

1. Calculate Your Income: Determine your total monthly income from all sources.

2. Identify Fixed Costs (i.e., Essential Expenses): List all your fixed costs (i.e., monthly expenses), including housing, utilities, food, transportation, healthcare, and debt payments.

3. Calculate Your Living Margin: Subtract your total fixed costs (essential expenses) from your monthly income to find your living margin financial goals.

4. Allocate 10% to Giving: Take 10% of your monthly income and allocate it towards charitable donations or any causes you support.

5. Allocate 10% to Savings: Take another 10% of your monthly income and allocate it towards savings. This could include contributions to retirement accounts, emergency funds, or other savings goals.

6. Allocate Remaining Funds: With the remaining funds in your living margin, allocate them towards flexible (discretionary) spending. This includes entertainment, dining out, hobbies, and other non-essential expenses. (*Reminder: set up this bank account at a different bank than your fixed cost account and predetermine the amount that you will allocate to your flexible spending)

7. Track Your Spending: Monitor your spending throughout the month to ensure you stay within your budgeted amounts for giving, saving, and discretionary spending.

8. Adjust as Needed: If you consistently overspend in specific categories or don't meet your giving or savings goals, adjust your budget accordingly for the following month.

9. Review and Reflect: Regularly review your budget and financial goals to track your progress and make any necessary adjustments based on changes in your income or expenses.

By following these steps, you can incorporate your giving and savings goals into your living margin budget, allocating a portion of your income to charitable causes and building a financial cushion for the future.