The 60% Solution is a way to budget without having to account for every penny spent. After all, the goal of budgeting is simply to control overspending and prevent unnecessary debt.

The 60% Solution aims to keep your committed expenses at or below 60 percent of gross income, to help you come out ahead at the end of the month. Although your number might be a bit higher or lower, 60 percent is a feasible goal and a good place to start.

Gross monthly income (or income before taxes)$____

60 percent of gross monthly income……………$_____

Committed expenses can be defined as the following:

Basic food and clothing needs……………$______

Essential household expenses, including mortgage

or rent payments..................$______

 Insurance premiums ………$_______

Charitable contributions ……$_____

All bills, even nonessentials such as cable

TV and Internet services........$_____

All of your taxes………………$_____

                                   Total:   $______

 Do the six items above equal 60 percent of your gross monthly income? If not, see what can give.

The remaining 40 percent of gross income is divided into four chunks of 10 percent each, listed here in order of priority:

• Retirement savings. Contributions to qualified retirement plans (e.g., 401(k)s, IRAs)

10 percent of gross monthly income…………………………………$________

•  Long-term savings. Not technically a retirement account because you have access to the money should you need it. (Brokerage account and even your emergency fund; alternatively, a portion of this could be education savings, such as a 529 plan.).

10 percent of gross monthly income……………………………….. $________

•  Short-term savings for irregular expenses. Money for vacations, repairs, new appliances, holiday gifts, and other irregular but more or less predictable expenses.

10 percent of gross monthly income……………………………… $________

 Fun money. You can spend this on anything you want during the month.

10 percent of gross monthly income……………………………. $________

 Using this method, you more or less trick yourself into saving without having to count pennies every month. The savings can build up quickly, and so can your budgeting confidence!