![]() ![]() If your income increases by $2,000 every month, using a percentage-based budget, what you spend on specific categories is directly tied to your take-home pay. In fact, percentage-based budgeting has it built right into the model. ![]() ![]() This makes it especially challenging to get out of debt, save for retirement or meet bigger financial goals. Lifestyle inflation is increasing your spending when your income goes up. One of the most significant flaws I see with percentage-based budgeting is that it does not deal with the problem of lifestyle inflation, which is a financial killer. The number one thing you have to remember is that following someone else's budget that they lay out for you, without evaluating your own specific situation will never work, at least not for the foreseeable future. That means budgeting using percentages WILL NOT work for everyone. Every single budget, even the simplest ones, are entirely dependent on the personal lives and experiences of the person creating it. It doesn't matter how you budget your money.
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