But to allow for a little more breathing room, let’s use 15%, or $6,000 for this example. We generally recommend trying to save at least 20% of your after-tax income. This would include saving for an emergency fund, investing in a 401(k) or IRA, saving up for a down payment on a home, paying down your loans ahead of schedule, or any combination of these.
So it’s important you make this a priority by regularly setting aside a portion of your income for financial goals. The point of all this is to help you build wealth. But we’re working with rough numbers here to keep it simple and easy to follow. And your federal taxes will vary based on your deductions. Your state and local taxes will of course vary by where you live. So taking into account federal income taxes, FICA taxes, and state and local taxes, you’ll probably be paying about $10,000 a year on income of $50,000. After all, they’re unavoidable if you’d like to stay out of jail. Let the budgeting begin!įirst off, we need to account for taxes. You’ll want to consider factors that are unique to you when coming up with your own budget. Keep in mind, this is just an example and should not be viewed as a recommendation. Here we’re going to outline a sample budget for someone earning $50,000 a year. But it’s also helpful to work through examples with actual numbers. Understanding the concepts of personal finances is key to a healthy financial life.
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