5 Tips for Setting Up Your First Budget


Put Aside Some Savings

Experts recommend saving 10 percent of your salary.
Experts recommend saving 10 percent of your salary.
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As we mentioned before, determining your long-term financial goals is important for setting a budget. Who wants to run a race with an unknown finish line? You would pace very differently for a 5K than you would for a marathon. The same goes for whether you want to save for a car or for retirement.

A good rule of thumb recommended by most experts is to always save 10 percent of your salary. That means using only 90 percent of your income to pay for all of your living expenses. Financial writer Ken Little suggests making that 10 percent off-limits for living expenses -- only consider the 90 percent as usable [source: Little]. Another common rule of thumb is to make sure you have enough in savings to allow you to survive comfortably for three to six months of sudden unemployment.

Once you reach that point, that doesn't mean you should stop saving, however. Financial planners say you should continue to put aside 10 percent and invest it.