50/30/20 plan: A budget you can actually stick with

If you're new to budgeting, it's easy to get overwhelmed by visions of spreadsheets and pivot tables.

But there's more than one  way to budget . Instead of diving into the deep end, start with a simpler approach: 50/30/20. It's easy to set up and maintain, helping you to achieve your financial goals.

This approach to budgeting is perfect for those new to personal finance because it's easy to understand and follow. The biggest question most people have when creating a budget is whether they're spending too much on an item. Rather than fretting about how much you spend on, say, gas or coffee, this system allows you to create a general spending structure without being super specific.

You can set up this  budgeting method  in a spreadsheet, in your notes app, on pen and paper or you can use our  free template .

The only thing that really matters is to properly categorize your spending beforehand. That can be as easy as taking these three steps:

Step one: Record your monthly net income. This is the total amount you'll be distributing between needs and expenses.

Step two: Write down your expenses, categorizing them as wants or needs. The goal is to have these account for 30 and 50 percent of your income.

Being truthful with yourself is key. If you misclassify numerous wants as needs, you might encounter difficulties when it comes to covering crucial expenses like rent and utilities.

Ally Spending and Saving Buckets can help you get organized with building toward your financial wants and needs by automatically categorizing your income for specific goals. 

Even if you're being financially responsible, it's possible for your debt/saving category to exceed 20 percent. Perhaps you're saving more than 20 percent of your after-tax monthly income for retirement, an emergency fund and other goals. Or maybe your outstanding debt requires payments that account for more than 20 percent.

If you're a super saver and socking away more than 20 percent, don't worry about your budget not adhering to the target. But if your debt is more than 20 percent, you should examine where it's coming from.

Take some time to review your debt and see if you can repay it faster than expected. (Maybe you can reallocate some of the money you spend on wants towards debt repayment.) You can also try to refinance the debt to get a lower interest rate. Debt consolidation might also be an option for you.

Read more: Find a debt repayment strategy that works for you.

Introducing new financial habits into your routine can be intimidating, but practice makes perfect. Once you've mastered the 50/30/20 budgeting method, you might decide to start using  a more complicated system  — or not. The beauty of this budgeting philosophy is that it allows for detailed analysis but doesn't require it for you — and your spending — to stay on track.