All Your Worth

The monthly Must-Haves are the very heart of your money plan. The Must-Haves claim more money than anything else you buy. They keep your life dignified and secure. The Must-Haves are the first, last, and most important purchases, around which all other money decisions are arranged. Balancing your Must-Haves will create the bedrock upon which you ca

Why 50% for Must-Haves? That’s the first question most people ask. The Must-Haves get only half your money? Half? How can that be? Are we saying you live on only half your money? Not exactly. We’re saying you should limit the hard-core commitments to at most half of your income. Remember, Must-Haves are the things you will have to pay no matter wha

Start by deciding how much you will each contribute to the joint expenses. If your income is a lot higher or lower than your partner’s, consider using the Balanced Money Formula as a guideline. That way, you both contribute the same percentage of your income to the Must-Haves, you both keep the same percentage for Wants, and so forth.

1. It is sustainable.

Our research led us to a very simple and incredibly powerful financial principle that you won’t hear anywhere else—balance.

By figuring out now what is a Must-Have and what is a Want, you make it very easy to follow the golden rule of financial responsibility: Pay your Must-Haves first. The Wants should never, ever compete for money with your Must-Haves. In

Think of it this way: If you can change a 60-40-0 budget to a 55-30-15 plan, you will be much better off. Granted, you won’t be perfect. But you will start getting ahead, each and every month. Moreover, with those kinds of numbers, in a few years you will be in a better place than the overwhelming majority of Americans.

We put forth three simple guidelines to decide what qualifies as a “Must-Have”: Could you live in safety and dignity without this purchase (at least for a while)? If you lost your job, would you keep spending money on this? Could you live without this purchase for six months?

Keep the number in front of you because it is your goal: This is the amount of money you want to squeeze from your Must-Have expenses, so you can get your monthly spending into balance. Every time you make a cut in your Must-Have expenses, put it toward that goal.