Step 2: Track your spending. It’s helpful to keep track of and categorize your spending so you know where you can make adjustments. Doing so will help you identify what you are spending the most money on and where it might be easiest to cut back. Begin by listing all your fixed expenses. These are regular monthly bills such as rent or mortgage, utilities or car payments. It’s unlikely you’ll be able to cut back on these, but knowing how much of your monthly income they take up can be helpful.
Step Four: Spend 20 Percent on Savings and Debt Repayments. Now about the extra ๛ you pay on that credit card each month. That's neither a want nor a need. It's the ൜" in the 50ቺተ rule. It's in a class all its own. You should spend at least 20 percent of your after_tax income repaying debts and saving money in your emergency fund and your retirement accounts.