AmeriServ Presents: Bank Chats

Mastering The 50/30/20 Rule For A Stress-Free Holiday Budget

• AmeriServ Financial, Inc. • Episode 26

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Holiday spending doesn’t have to wreck your January. We take a clear, no-jargon look at the 50/30/20 budgeting framework and show how to make it work when life gets messy, prices rise, and traditions add extra costs. From right-sizing housing to rethinking commutes, we map out practical ways to protect the essentials while still enjoying the season.

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Credits:
An AmeriServ Financial, Inc. Production 
Music by SchneckMind
Hosted by Drew Thomas and Jeffrey Matevish

Thanks for listening! You can find out more about AmeriServ by visiting ameriserv.com. You can also find us on Facebook, Instagram, and Twitter.

DISCLAIMER
This podcast focuses on having valuable conversations on various topics related to banking and financial health. The podcast is grounded in having open conversations with professionals and experts, with the goal of helping to take some of the mystery out of financial and related topics; as learning about financial products and services can help you make more informed financial decisions. Please keep in mind that the information contained within this podcast, and any resources available for download from our website or other resources relating to Bank Chats is not intended, and should not be understood or interpreted to be, financial advice. The hosts, guests, and production staff of Bank Chats expressly recommend that you seek advice from a trusted financial professional before making financial decisions. The hosts of Bank Chats are not attorneys, accountants, or financial advisors, and the program is simply intended as one source of information. The podcast is not a substitute for a financial professional who is aware of the facts and circumstances of your individual situation. AmeriServ Presents: Bank Chats is produced and distributed by AmeriServ Financial, Incorporated.

Drew Thomas:

It's that time of year.

Jeff Matevish:

It's that time again.

Drew Thomas:

It is that time.

Jeff Matevish:

The most magical time of year.

Drew Thomas:

The most magical time of the year, the magical time where my wallet is empty and my stomach is too full.

Jeff Matevish:

Not if you play your cards right, you know, and your wallet is not going to be that empty, but.

Drew Thomas:

I don't know, I this, I don't know about you, I spend a lot more money between the months of November and December than I do probably the next four months January through April. Really. I mean, it's, it's, it's, there's a, there's a lot of cash leaving. And it's not necessarily a bad thing. It's not even all just gifts or stuff like it's, it's just the idea of having family over for dinners, and you're buying big meals and you're buying whole turkeys instead of turkey breasts. Yeah, yeah, yeah. So, it's, it's, it's one of those things, but.

Jeff Matevish:

Did you, did you, did you set up an E-Holiday Club this year?

Drew Thomas:

Did I set up a, shameless plug. I actually do have an E-Holiday Club. I should put more into it every, every out of every pay. Yeah, I find that I've, I sort of stopped adjusting it a couple of years back, and I really should probably bump it up a little bit. Yeah, you have an E-Hoiday?

Jeff Matevish:

I have not jumped on that bandwagon, but I probably should, yeah, the same boat as you. Yeah, I do spend more at the end of the year.

Drew Thomas:

So, so you're ragging on me, but meanwhile, well, yeah, our own, your own house is not in order. See, that's, yeah, it's so no. So, yeah, so it's, I mean, holiday season, and there's all sorts of stuff to talk about, but you know, because of the spending, you know, you brought up a really good point, which was, you know, we've given some advice on the, on the show before, regarding ways to budget, and we've talked about envelopes, and we've talked about the 50/30/20 rule. And you made a good point the other day when you said that, you know, we don't always go in depth on some of these things. So, we decided today we're going to talk more in depth about the 50/30/20 rule, right? Yeah, so remind everybody what it is.

Jeff Matevish:

So, it's a budgeting technique that you take 50% of your after-tax income, that should go into your, go towards your needs, 30% should go towards your wants, and 20% should go towards long-term savings.

Drew Thomas:

Okay, so now, when you say long-term savings, is it savings, or is it just like, does that mean my 401K and my IRAs, or does that mean just a savings account?

Jeff Matevish:

So, it depends on what article you read, yeah. So, some say it's, it's for retirement. So, that's your 401K, your IRAs, and others say that your emergency fund is looped into that too. Others say your emergency fund is part of your needs, you know? Okay, yeah, I would tend to say long-term retirement savings. Yeah.

Drew Thomas:

Okay, so let's go ahead and do like you suggested. Let's, let's really delve into this and break this down a little bit, because it's easy to say 50% for your needs, 30% for your wants and 20% for your savings, but what is a need? Yeah, right. And are your needs the same as my needs? What are my needs, Jeff?

Jeff Matevish:

What are your needs? What do you need, Drew? yeah, no, yeah. It's different for everyone, definitely, and depends on your lifestyle and where you live. And, I mean, there's lots of factors, sure, yeah.

Drew Thomas:

So, I think I would argue that one of the, the main needs that most people would say is a place to live. You need a roof over your head. Yep, right, yep. But you may not necessarily need a $427,000 house.

Jeff Matevish:

No, that might be your want, yeah.

Drew Thomas:

Which, incidentally, is now, I think the latest figure in terms of the average home price, to be exact.

Jeff Matevish:

That's so ridiculous. That is so ridiculous.

Drew Thomas:

I, I just can't imagine the average home price in the US being $427,000 just crazy. But so, yeah, so a roof over your head, do you, but do you need three roofs over your head? If you have, you know, I don't know, yeah, right. And I guess that depends on your family size, right? So, so you have a bit of an addition to the family, you know? So, you know, so, I mean is, is your living situation going to be good for a while? Yeah, right. But, but to your point, you know, if

Jeff Matevish:

It is, yeah, yeah. Okay. Now, if I have another child, that may be a little different story. But yeah, for now, then, yeah, we're good with our, our living situation space wise. you're if your family is expanding and suddenly you have, you know, a three-bedroom house and you've got three kids and they can't bunk up together, things like that, sure. Yeah. You know, there comes a point where maybe you do need to reassess that maybe renting isn't for you. Maybe you do need to look at a house, you know. Conversely, if you are a couple that maybe is becoming empty nesters, right? Yeah, maybe you no longer need the house that you needed 25 or 30 years ago. Yeah, that's becoming more and more common. People don't want to, you know, heat their house, giant house that it's only two people in anymore, or they don't need that much space anymore. Yeah, yeah.

Drew Thomas:

You know, sometimes it's, it's even the amenities of the house, you know, like, oh, you know, it was really great having a swimming pool whenever the kids were at home, and having pool parties and stuff. But now it's just a nightmare to clean it all the time, and I have to pay to heat it, and I have to maintain it, and I put chemicals in it, and it's an insurance issue. And, you know, maybe that's the kind of stuff that you don't necessarily need either.

Jeff Matevish:

Or you're following your kids. Maybe they've moved away, and you have, you know, they have kids now, and you want to be close to your grandkids, you know. So, you're just downsizing, just because of the necessity to move. Yeah.

Drew Thomas:

Yeah. I mean, you make a good point. I don't think that a lot of people live the way that, like my grandparents did and even my parents, you know, a lot of times, you know, once your grandparents sort of settled in a place, a lot of families, they never moved more than 50 miles away from one

Jeff Matevish:

And around here, they didn't move more than, you another. know, 50 yards away from each other. I mean, my grandmother and grandfather, they live right next to their parents, and then they lived right next to, you know, my grandfather's brother, you know, yeah, there were, like, family compounds back in the day, pretty much, you know.

Drew Thomas:

Yeah, you had, you had the family estate, yeah, or something along those lines, yeah, so, but these days, I other needs would you say, other than housing? I mean, you can, mean, people move across the country for a job, yeah, right, yep. And, you know, I got to get my, I got to get my little history dig in here, but, sure, you know, but I think about it sometimes, whenever, whenever we're traveling, like, if I'm traveling, or me and my wife are going someplace, and I think to myself, yeah, she has family in Kansas, okay, right? Yeah. And,

Jeff Matevish:

45 minutes or an hour, or something like that is you know, I think to myself at times that I can be in Kansas, like, the average commute to a job now, or something like, it's at eight o'clock in the morning, and then I can be back in Pennsylvania at three in the afternoon. Yeah. And 100 years ago, even, that would have been a several-day journey, oh, yeah, 200 years ago, that would have taken months, right, right? And yet, we can do it inside of a day now. So, you know, there's a lot of people that have moved simply because they find a good job opportunity, they'll move across the country and they'll just fly home. yeah. Yeah.

Drew Thomas:

And that's a really, really good time to listen to podcasts. It sure is. I'm just saying, because you got time, you know, when you're sitting on the highway, you know, you can either jam out to the same old music that you've you really can think about what your housing needs are in terms of renting versus owning and all that kind of stuff. But what

Jeff Matevish:

Transportation is another good one. So, you need to be able to get to your job. But there could be a little gray area with that too. So, you may need a car, you may not need a car that costs the same as your annual salary. Ah, yes, exactly. That could be put into a want.

Drew Thomas:

Yeah, well, and really that comes down to, I think it's a personal preference, but it's also sort of a, sort of a, who am I trying to impress? Yeah, right, yeah. I think there are a lot of people that own high-end vehicles and things like that, because they love them and because they truly they're just a car guy or a car girl, and they just really like that stuff. But there is a significant percentage of those people who own those cars because they think that the person sitting behind them in the, on the highway, or to the left of them or right of them, or when they pull into their, their parking lot at work, other people are impressed by that car, right? More so than they are right, right? So, are you owning that car to impress, or are you owning that car for transportation? Yeah, is the is the question, yeah. And it also to your point, I think too, it depends on where you live. If you live in a major city, maybe you don't need a car, yeah, maybe you can get by on buses and subways and trains, and if you live in the suburbs, you kind of need to have a car.

Jeff Matevish:

Yeah, and, you know, you may be able to reallocate some of that money that would have gone towards a fancy car, you know, if you can afford it, you know, if you're taking a bus every day and it's costing you, yeah, I don't, I don't know, $50 a week. You know. Yeah, you're not paying that in gas and insurance and all that kind of stuff. So, maybe put that money that would have gone towards that stuff into maybe a little better house or another, another need, you know, life insurance, that maybe you don't have life insurance and now you can afford life insurance, you know, something like that.

Drew Thomas:

Yeah, you definitely got to weigh it out in terms of, nothing is free. It's pretty rare to find something in life that is truly free. You're usually offsetting one cost with another. The question is, is it cheaper to have the car and, you know, have the you know, some people like the freedom of a car. The freedom you know, the car gives you the ability to come and go as you please. You don't got to wait for the train to arrive. You don't got to wait for you don't get to check the bus schedule. Sure. You don't got to depend on other people to, you know, to bum a ride off of them, you know, on your way home. Yeah? So, a car definitely gives you freedom as well. But again, you know, if you know bigger cities, things like that, you might be paying hundreds of dollars a month just to park. opposed to making a dinner, it's tough to cook for

Jeff Matevish:

I was just going to say, yeah, parking, that's a big one.

Drew Thomas:

Yeah, you know. And if you, if you drive it once a month and you're paying several$100 to park it in a parking space, is it really worth it? Yeah, yeah, I don't know. You know that's, I mean, only you can decide, yeah, yeah. That's, I think you made a good point when we started sort of talking about this, before we started this conversation, right? Was the idea that there's sometimes some gray area in terms of what

Jeff Matevish:

grandmother was, was like that, you know, it's is a need and what is a want, big time, yeah, things like that right now. So, let's stick with needs, though, for the time being. So, I would argue food, food you got to eat. Yep, again, do you have to eat at high end restaurants? Not necessarily, you know, well, even grocery stores and things. hard to go to the deli or, you know, the grocery store and say, I need three pieces of cheese, you know.

Drew Thomas:

Yeah, right, yeah. I would like an eighth of a pound of ham, right? Right? It's not...

Jeff Matevish:

You don't buy a chicken breast by the single usually, you know, right? So, yeah, I understand that completely.

Drew Thomas:

Yeah, so in some cases it might be, but it also comes down to your health. Then too, if you're eating fast food all the time. We all know that as tasty as it might be, it's not the best for your health, in most cases, to eat fast food all the time.

Jeff Matevish:

Yeah, and a home cooked meal of ramen six nights a week does not constitute as a healthy meal.

Drew Thomas:

There's a lot of sodium in there. Yeah, your blood pressure is going to take a take a hit, sure, if you're doing that, yeah, and it also, you know, to that point, kind of depends maybe a little bit on your age and your overall health, going into that too. You know, if you're, if you're younger, you're a college student, you know, the conceit is oh, I lived on ramen for two or three years while I was in college, right? Nuking it in my dorm microwave or something like that. But when you're 20, you know, you can, sort of, I'm not saying that you should, but you can absorb more blows to your health, usually, than if you're 75 right? So, if you're 75 you probably shouldn't be doing ramen every day, whereas, if you're 20, maybe you can get away with that a little more often.

Jeff Matevish:

Yeah, that brings up the health insurance. That's, that's another need that you need, yeah? But, you know, maybe that that's that looks different for someone who is, you know, 60, versus someone who's 20 maybe, yeah, yeah.

Drew Thomas:

Health insurance is definitely one of those hot button issues, I think not, for a lot of people. And I think the US is really one of the only countries that ties health insurance so closely to your employer. Most other countries, it's either like, in the UK, it's like, United Healthcare, where it's like, it's universal, yeah, where it's you. And in other countries, even if it's private, you're paying for that insurance sort of separate. Yeah, in the US, I think that there's an argument that there are a lot of people who are working past retirement age or staying in jobs that are maybe less fulfilling for them, simply because of being, needing to be able to perform, afford health insurance.

Jeff Matevish:

Yeah, yeah, that's really common with spouses that are have a pretty big age gap too. Yeah, you might have your wife, maybe, you know, 10 years younger than you, but you have to work to keep her health insurance, you know.

Drew Thomas:

Yeah, that's, yeah, that's a good point. And you know that also comes into play with some things. You know, sometimes spouses, you know, one, one spouse is holding all the health insurance for the family, whereas the other, you know, and the other spouse doesn't have any. So, then that becomes a question of, well, can I, if I'm, if I'm the healthcare holder for my whole family, now, now I have that much extra pressure on the fact that I can't lose my job, I can't move on. I can't do anything else. Oh, yeah. And on the other side of it, the spouse that doesn't have the healthcare for themselves, you know, if there's a personal conflict in the home, or something like that, that puts pressure on them to try, like, well, now I got to make this work, because I can't handle things on my own. Because, you know, so healthcare is definitely a need, but it is, it's a complicated need I would argue.

Jeff Matevish:

Yeah, I'd have to agree, definitely.

Drew Thomas:

So, that's pretty much, I think I don't do, I don't know if we missed anything. I mean, you need a roof over your head. You need to be able to stay healthy, and that includes being able to eat and get to and from where you need to go. Ideally, your job most likely, because you got to have money to pay for all this other stuff, right, right?

Jeff Matevish:

The only other thing would be utilities, but that's kind of looped into your living situation. But again, there could be gray areas there. You know, do you need, you know, high, the highest speed internet, or do you need the, you know, unlimited cell phone bill or plan? You know, is that a need or is that a want?

Drew Thomas:

Yeah, you make a good point. I would say things like water is a need. Is a need. That's a utility, water, electricity, gas. If you've ever had your water shut off for more than a few hours, you know how frustrating that can be. I'm sure. I don't think, I don't think a lot of people realize sometimes, just how often they turn on the faucet until you can't. You know whether it's taking a shower, washing your hands, filling up a bucket, yeah, cleaning the stove top, washing clothes.

Jeff Matevish:

I know how I feel if I have a turn on the sink and have brown water because they're doing sewer work or something. Yeah, and I can't, you know, I can't do the laundry, or I can't take a shower or boil water or whatever, you know, so I not having it at all, yeah I would not want that at all.

Drew Thomas:

Yeah, same thing I would argue with electricity. Yeah. I mean, in these days, with the way our technology is, and the way that our houses run and the way that our society runs quite frankly, if you don't have lights and you don't have electricity, it's hard. It's definitely hard. There's very few people out there that can get by on candlelight and waking up at dawn, yeah, especially when dawn changes every couple of months. I'm still sore over daylight savings time. Sorry, but yeah, so those...

Jeff Matevish:

But there's ways to get around that too, you know, solar power now. I never looked into it, but some people do solar power to, you know, offset that cost. And, yeah,

Drew Thomas:

I mean, you can definitely try to live off the yeah. grid, if you know, possibly. But sometimes that also requires having enough money to invest in that technology up front. You might have to have a couple, I mean, and when I say a couple, I mean in the five figures of 1000s of dollars to be able to buy house batteries and solar panels and things like that. But if you can afford to, you might offset some of that cost down the road, because you're not paying for like, paying for electricity. Yeah, but to your, to re[visit], to circle back to your point about internet, you're absolutely right. Some people absolutely need to have high speed internet. Maybe they work from home. Maybe, you know, there's, there's some legitimate reason for needing that high speed internet. And then some people who are if all you're doing is using the internet to Well, and now we have everything's connected to the check Facebook or something like that, maybe you do it on your phone, you know, if you have a data plan, yeah? And just forgo the home internet, yeah? internet too, so everything's eating up more bandwidth than ever. Including your refrigerator.

Jeff Matevish:

Yeah, it's ridiculous. I was online the other day looking at, like, just Alexa connected devices, and they have microwaves now that are Alexa connected. It's ridiculous. I don't know. Should have clicked on it and saw what the actual integration was, but, yeah, it's like, whatever they can stick, you know, Alexa in, they try to stick Alexa in.

Drew Thomas:

Yeah, it's I, yeah I mean, I'm a geek. I fully admit it. I'm a card-carrying member of the technology crew. Yeah, all that stuff. But even I think that there's a limit to some of the stuff, like, why do you need it in your microwave? Yeah, I don't.

Jeff Matevish:

Well even in the fridge. I don't need to look into my fridge without opening it, you know?

Drew Thomas:

Yeah, the little indicator on the door that tells me that the water filter is due to be replaced is enough. I don't need a notification sent to my phone, right? Yeah, washers and dryers, I can kind of get behind a little bit, because sometimes washers and dryers are in the basement. And if you want a notification saying that, like your laundry is done or the cycle's over.

Jeff Matevish:

Just know how long it takes. I mean, if your laundry usually takes 45 minutes, it's going to always take 45 minutes.

Drew Thomas:

I mean, that's fair. That's fair. You win. I'll give you that one. I was also thinking a little bit about kids, you know, we live in the north, and starting around this time of year and going through the winter, you know, you're going to start to see up north, in the northern states here, snow days and things like that. A lot of schools, back during covid, started issuing iPads and laptops for their students, and then they would have at-home workdays, yeah, right, rather

Jeff Matevish:

Yeah, I think some communities have, like, than a snow day, right, right? But if your family doesn't have high speed internet, then I don't know how that works for those folks. subsidized internet for, for those kinds of situations, like you'll get like, hot spots from like your, your local, your city, you know, but I don't know exactly how that works. I don't know, but.

Drew Thomas:

Yeah, that's, you're quite, that's quite possible, but it does, you know, it's not always just the work from home folks or the, the personal use of internet. Sometimes it's, you know, providing internet for other reasons, I guess. Yeah, cell phone, same deal. You know, I think a cell phone is a borderline need these days, because, yeah, finding a landline is difficult, yeah, and if you do find one, they're usually pretty expensive. But to your point, do you need to have the highest data plan, the most perks, all that kind of stuff, or would a basic I don't, I one of those companies like Mint Mobile, or, what do you use?

Jeff Matevish:

I use Consumer Cellular, which is, yeah, built on AT&T, yeah.

Drew Thomas:

Yeah. So, I mean, some of the, you know, maybe that's enough, yeah, that's all you really need. Yeah, you know.

Jeff Matevish:

I never had a problem.

Drew Thomas:

Hint, hint, okay, so what other wants?

Jeff Matevish:

Some wants, yeah, okay, so memberships, to things, fancy clothes, subscriptions, subscriptions, yes, online subscriptions, we keep coming back to that somehow, cable TV, furniture, vacations, hobbies and eating out.

Drew Thomas:

So, yeah, so I want to touch on the whole vacations thing, because here's, because here's, here's the thing. Vacations, I think that there's been a real push in recent years from a lot of sort of avenues, a lot of, a lot of, a lot of points. You know, mental health experts, things like that, saying that in the US, we kind of work ourselves into the grave, especially when you compare to other, other countries in terms of how much holiday time we get and vacation time we get, that sort of thing. But conversely, a vacation does not necessarily, you know, we've been sold this idea through advertising a lot, that a vacation is not a vacation unless you're on a cruise or you're traveling to some Mediterranean beach, or you're in the Caribbean or something like that. Like a vacation can be spent at home or near home and still give you that mental recharge you need. Oh, yeah, without necessarily having to spend $4,000 to go on vacation.

Jeff Matevish:

Definitely. Yeah, my wife and I, mean camping, that's a huge, that's our vacation a lot of times. And you know, that could be really cheap, yeah, yeah.

Drew Thomas:

Where do you usually camp? Do you do the tent? Or do you do like a camper?

Jeff Matevish:

We do both. I have a camper, but we also like the simplicity of tent camping too. So, yeah, yeah, it depends, yeah.

Drew Thomas:

So, I think that's the thing is, is, you know, don't, don't, don't say, well, because I don't have a whole lot of extra money, I can't afford to go on vacation. Like, there's this, there's this stigma of, like, oh, you want a vacation, but you don't have any money, yeah, you can still take a vacation, just don't, you find other ways to do it that are more cost effective.

Jeff Matevish:

You and your wife like going on day trips, you know? Oh, yeah, yeah, yeah. 100% it's another great way to do a vacation, yeah, come home at the end of the day and sleep in your own bed and don't have to worry about a hotel, and you go out in the other direction the next day, yeah.

Drew Thomas:

Yeah. Or even if you end up with one night in some city and then come back the next day, well, you can make two days out of it and still only have to spend one night in one hotel. Yeah, you're still saving money, yeah. So, what else did you say? You said, you said vacations, you said eating out. You said hobbies. Oh, sometimes, well, yeah, we've talked subscriptions to death, but, yeah, I mean, if here's what I would say, check your subscriptions once in a while,

Jeff Matevish:

Yeah, and I'm trying to think of a make sure you're still using them. subscription that is like, that would be a need, and I can't think of any.

Drew Thomas:

Yeah, I mean, gym memberships are a really big one, because, you know, everybody says, well, that's for my health, and that's fine, yeah, but there's a lot of exercise you can do by just walking out your front door and taking a run or riding a bike. That's true. Yeah. You know, going to the public park and playing tennis or pickleball or something like that, you don't have to be necessarily a gym member.

Jeff Matevish:

Yeah, I mean, you, it's a little bit costly upfront, but buy your own equipment, you know, then that way you have it, you know. Yeah.

Drew Thomas:

I mean, sometimes, if you're renting stuff, sure, yeah.

Jeff Matevish:

Just bought a treadmill for my wife for like 100 bucks, you know. And in the wintertime now, she can walk on the inside the house and not have to worry about going outside. Yeah, yeah.

Drew Thomas:

You know, if you're looking to do stuff like that on, on a lower expense too, I mean, there's no shame in things like Craigslist or Facebook marketplace or eBay.

Jeff Matevish:

Craigslist, that's still around?

Drew Thomas:

I don't know. Okay, I'm showing my age. Maybe I honestly have no idea. I don't know, but that was the like the OG online marketplace, right? You know, flea market. Yeah, there's, I mean, look, I mean especially things like treadmills. I think you could argue that a lot of people buy treadmills, use them like five times, and then they become a glorified coat rack.

Jeff Matevish:

It's like the gym membership, right.

Drew Thomas:

Yeah, so if you're buying a used treadmill, you're probably buying a like-new treadmill.

Jeff Matevish:

Yeah, true, true.

Drew Thomas:

Okay, so, so let's, so let's, let's touch a little bit on, on, on the whole savings aspect. Okay, right? So, that's our last 20% right? 20% is savings. And you said that some people argue that that's your long-term retirement savings, like your IRAs and your 401K's and things. Other people sort of lump general savings into that. Now, I know I personally couldn't necessarily afford to take 20% of my paycheck and put it solely to savings, right? Yeah, I'd love to, but...

Jeff Matevish:

Or you may be able to do it, you know, a couple of months out of the year, you know. And not, not consistently.

Drew Thomas:

Yeah. And so, you know, I think the, the argument that I would make is that it's kind of like exercise and the whole gym membership thing. If someone says to you, you have to exercise five days a week, and you say, well, listen, my job or my kids or my social life or my whatever, doesn't allow me to do five days a week. I could only do three. That doesn't mean you do zero. Yeah, right. It's not like an all or nothing, like, well, I have to do five days a week, but since I can't do five, I'm just going to do not, right? So, now that's what I do. No, I'm but the I think the same applies to savings. If you can't do 20% that doesn't mean you don't do anything. Yeah, do what you can. Yeah, right. Even if it's 5% right, it's better than zero.

Jeff Matevish:

Yeah, and that's a good way, you know, segue into, you know, the 50/30/20 rule, though it's called a rule, it's not really a rule. It's a it's a method. It's a, I don't know what you want to call it, but like, there's wiggle room. You don't, you have to, you know, it's not always 50/30/20, if you can only do like you said, 10, you know, do 10, and you know, you your, your needs may go up by 10% then, you know.

Drew Thomas:

It's like Barbossa with, with the pirates' code, more like guidelines than actual rules.

Jeff Matevish:

Yes, that's perfect. That's perfect. Yes, they're guidelines, because there's other methods, you know, other than the 50/30/20, and I didn't know about these. But so, there's 70/20/10, which is 70% allocated to your living expenses. 20 to savings and investments. And then 10 to donations. We didn't talk about donations at all but a lot of people, they donate, you know, a good chunk of their income to, you know, some charitable Sure. You know something, you know?

Drew Thomas:

I mean, if you're, if you're a devoutly religious person, a lot of people have to, you know, I shouldn't say they have to, they choose to allocate money toward tithing and things like that for their church, right, or synagogue or whatever, you know. So, yeah, absolutely right.

Jeff Matevish:

40/30/20/10, they're getting longer and longer, yeah, but same, same premise, you know, 40 for needs, 30 for wants, 20 for savings and 10 for donations. You can go the other way. 80/20, 20% to savings and 80% to everything else. So, if you kind of just want to consolidate and lump two, two of those categories together, you can. 60/40, 60 for your fixed expenses, insurance, mortgage, things like that. And then 40 goes to anything outside of your normal so things that you know you are one-offs, you know that we would maybe consider your emergency fund. So, you need your hot water blows, and you need a hot water tank, okay, 40% goes to that.

Drew Thomas:

Yeah. And, you know, sometimes you have one-offs that are not necessarily even stuff, I mean, that's a big one, but even one-offs like holiday spending, yeah, you know, to kind of bring this full circle, yeah, right. I mean, you don't spend as much money buying gifts for people and stuff as you do around this time of year, in April, yeah, right? Or vacations, you know, sometimes you're spending a little more heavily when you, you know, when you, when you go on vacation, you actually do get to take a trip somewhere. A lot of times it's, ah, we're on vacation, right? How many times do you hear that people say, like, you know, I don't know if I should buy that. Ah, we're on vacation, yeah, right. Just get it, you know, it's fine, you know. So, those kinds of one-offs too, like, build that into your budget a little bit.

Jeff Matevish:

Insurance is another one. Like, auto insurance I pay, I tend to pay once a year, because I usually get a little bit better rate if I pay once away, yeah, you know. So, that's a one-off that, you know, kind of a one-off. I know I'm going to have it, you know, every single year, but I don't have to allocate that money every month, you know, towards, yeah.

Drew Thomas:

Yeah. Well, I mean, I'm sure that as we, as we get ready to enter into yet another new year, we're going to be talking, you know, soon about things like taxes and things like that. And, you know, a lot of people use their tax return for things like, yeah, their, their annual insurance bill for their auto insurance or things like that. You know, they sort of know that money's coming from, from, from their refund, so they'll just sort of time it out, and when they get their refund, they'll pay their auto insurance. Yeah, yeah. You could also use holiday clubs and things like it. Just because it's called a holiday club doesn't mean you can't use it for other purposes. That's true. Yeah. Yeah, you could open up a holiday club and then sock a little bit of money away every, every pay every month. And then, if you know that, you know you're going to have those things coming due in October, November timeframe, you know, use a holiday club for that kind of thing. You know, use it for, for the purpose you need it for, rather than what it's named for. It doesn't have to be that. Some banks and credit unions and stuff will let you open those kinds of clubs and let you choose your disbursement date. It's not as common. Usually, it's, it's one of those things where holiday clubs get dispersed around October-ish timeframe. But there are organizations out there that will let you choose your disbursement date. So, you could use that kind of a club for that, okay, you know. And okay, you know. And then kind of say, hey, listen, I want my disbursement in March instead. Because, why not? Yeah, you know, yeah. I think this is a good, I think this is a good conversation. I think this is definitely something that, I hope maybe frees people up to understanding that, you know you shouldn't just abandon the idea of a budget if you can't strictly follow a particular regimen or a particular ratio.

Jeff Matevish:

Yeah, it's not an all or nothing.

Drew Thomas:

Yeah, you know, just do what you can. And budgeting is, is definitely helpful, and especially if you can sock a little money away, like you said, for that sort of like want spending that kind of stuff, you know, like that special needs spending, it makes it a lot easier to spend it, because you kind of, know, that's what it's for. You know, you're, there isn't that little thing in the back of your head going, well, I should be buying something else, but I'm going to

Jeff Matevish:

Yeah, there is, there is a mental element to, buy this. like, a savings account definitely, like, you know, just even the name, like, you know, I know that's for something that I can't touch right now, you know, that's like a last resort, you know, fund, yeah, yeah, definitely, yeah.

Drew Thomas:

I definitely, I have one of those. I have an account that I put a little money into every month, and I try to forget it even exists, yeah, with the hope that, you know, I mean, I monitor it from once in a while, just make sure it's not get like a victim of fraud or something like that. But I don't, I don't even have a debit card for it. It's literally just an account at another financial institution that I dumped some little money into, and then I let it ride and, and I did dip into it one time last year, and it was really handy to have it sure, you know, available to me, you know, at the at the time that I needed it, but then I then, after I used it, I was like, okay, now that again, you know, yeah. So, yeah, good stuff. So, anyway.

Jeff Matevish:

Happy holidays, yeah, yeah, jinx.

Drew Thomas:

You owe me a Coke. Yeah, happy holidays to you, and we are definitely in the midst of it now. I consider the holiday season anytime between Thanksgiving and New Year. So, yeah, it's, it's, it's a long gap, which, right now we're kind of in that little like lull. But it's, it's still the holiday season to me, so yeah, yeah. So, hope everything's great for you.

Jeff Matevish:

You too. Stay warm. Yeah. Thanks. Yeah. This podcast focuses on having valuable conversations on various topics related to banking and financial health. The podcast is grounded in having open conversations with professionals and experts with the goal of helping to take some of the mystery out of financial and related topics, as learning about financial products and services can help you make more informed financial decisions. Please keep in mind that the information contained within this podcast and any resources available for download from our website or other resources relating to Bank Chats is not intended and should not be understood or interpreted to be financial advice. The hosts, guests and production staff of Bank Chats expressly recommend that you seek advice from a trusted financial professional before making financial decisions. The hosts of Bank Chats are not attorneys, accountants or financial advisors, and the program is simply intended as one source of information. The podcast is not a substitute for a financial professional who is aware of the facts and circumstances of your individual situation. Thank you for listening. Please check out our full library of episodes, which can be found on the ameriserv.com website. You can also download or stream the podcast from your favorite podcast app.

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