Dr Oz: 50-30-20 Rule For Less Money Anxiety
Dr Oz was talking to Tiffany, a woman who has been living with money anxiety that has started to take a toll on her health. Dr Oz had financial expert Manisha Thakor on his show to help Tiffany overcome her money anxiety and feel better about her financial situation.
Manisha explained that you need to use the 50-30-20 Rule in order to separate your money from your emotions. Manisha said it’s a great way to determine whether you’re off balance in your spending.
In an ideal world, roughly 50% of your income would go toward needs, 30% would go toward wants, and 20% for savings. They key problem a lot of us have is distinguishing between needs and wants.
Needs include housing, transportation, childcare, foods you need to eat, and mandatory debt pay-down. Wants are things like eating out, morning coffee, travel, and gift. Savings are retirement funds and debt beyond a minimum payment.
Dr Oz: What Are Your Priorities?
Manisha said with kids, there are a lot of “should’s” and the answer to turning things around is to determine if it’s something that truly brings you authentic joy. If it doesn’t, it’s a should, and you can get rid of it.
Tiffany said her kids partake in soccer and chess, but she thinks it’s incredibly important to expose her kids to those activities, whereas eating out for dinner is something they should probably do a lot less of. That’s something she could dramatically reduce without affecting her family’s happiness.
Dr Oz: Equal Income & Expenses
The last step is to “get financially naked.” Manisha explained that it’s being very clear with yourself about what your household income is and what your aggregate household expenses are. If your expenses are roughly equal to your income, that’s a red flag that things are out of balance. Manisha said when individuals are able to combine all of these things together, they’re able to reduce their money anxiety.
Dr Oz said to figure out what brings you true joy in life and stick with those. Do less of the things that have become secondary.
What are the things that bring you authentic joy? What should you give up in order to be more financially secure?