Foundations of a Strong Budget: Part 4 – Putting Balance Into Practice
In Part 3, we introduced the 50/30/20 framework: 50% of your income for needs, 30% for wants, and 20% for savings. The idea sounds simple enough, but how do you actually make it work in everyday life?
In Part 4, we’ll look more closely at how to put this balance into practice. We’ll explore strategies for adjusting your spending categories and finding small changes that add up over time.
Balancing the needs and wants is what we’ll be talking about today. As we’ve discussed, we should try to fit them into the 50/30/20 model if possible. The reason needs need to fit in that 50% is to keep them from encroaching on the wants, and then the wants on the savings. Needs should be taken care of, but the way we meet them makes a big difference.
Step 1: Keep Needs Within 50%
Technology is a great example. A basic smartphone with talk, text, and internet fulfills the need. You could also choose a model a couple generations old and save a significant amount while still getting extra features. The newest flagship model with extra cameras, storage, and premium features leans more toward a want. If you budget the upgrade in the “wants” category, that’s fine. It may even motivate you. But unless it’s essential for your work or lifestyle, other needs or wants may take priority.
The same principle applies to housing and utilities. If your rent, mortgage, or utility bills eat up more than half your income, the rest of your budget suffers. A six-bedroom home with a pool may sound appealing, but if it’s just you and a partner, it isn’t a necessity. Likewise, if you’re single, maybe a studio apartment would meet your needs without straining your budget while you build up your savings.
By keeping needs within the 50% category, we free up space for wants and savings.
Step 2: Pursue Wants at the Right Time
Once needs are managed, we can begin to pursue valid and helpful wants in a good way. By a “good” way, I mean one that we can afford, and in the right timeframe.
Take the example of a new computer. Maybe you’re a gamer or like to create videos, and your current machine works but you’d love to upgrade. That’s a genuine want. It adds enjoyment and may even support your hobbies or skills.
But timing matters. Let’s say you’re saving only 5% of each paycheck. Your needs are at 50%, but your wants are creeping up to 45%. Much of that 45% may be poorly timed spending on smaller wants. Before buying the computer, ask yourself: Can I afford it now, or would waiting make it easier?
If you boosted savings from 5% to 15%, you might be able to pay cash in six months or a year. If you use credit, be aware of the cost:
A $1,500 computer could cost $1,640 if paid off in a year. It could balloon to almost $2,400 if carried on a credit card for five years. If you waited a year and saved, you’d spend only $1,500 - maybe less if you caught a sale.
Sometimes a mix of saving and short-term credit can make sense, but the goal is to keep purchases within the 30% “wants” bucket and avoid paying unnecessary interest.
Step 3: Strengthen Savings Slowly but Steadily
If you’re not yet hitting the 20% savings target, don’t worry. Small steps make a difference:
- Increase your savings rate by 1–2% each month.
- Automate transfers so savings happen without extra effort.
- Redirect windfalls like bonuses or tax refunds into savings instead of immediate spending.
This way, you’re not cutting all wants out of your life. You’re simply rebalancing to make future wants more affordable and more enjoyable.
Why Small Adjustments Work
A balanced budget isn’t about cutting out fun or living on the bare minimum. It’s about making thoughtful adjustments so each part of the 50/30/20 model works in harmony. Lowering housing or transportation costs here, delaying a purchase there, or nudging up savings little by little - all of these add up. Over time, these changes reduce stress, create more flexibility, and make your wants more rewarding because they’re truly affordable.
Coming Up Next
In Part 5, we’ll focus on savings. We’ll talk about why saving is so important, how to make it a consistent part of your budget, and how building a savings habit can give you lasting peace of mind.