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If You Hate Budgeting, Try the 80/20 Rule to Save Money Without Tracking Every Single Expense

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This story is part of CNBC Make It's One-Minute Money Hacks series, which provides easy, straightforward tips and tricks to help you understand your finances and take control of your money.

If sticking to your monthly budget feels like a struggle, you're not alone.

Just over half of Americans don't know how much money they spend month-to-month, according to a 2021 survey of 1,938 people published by The Penny Hoarder

A budget can help you identify unnecessary expenses and keep your savings on track — especially if you're one of the 64% of Americans living paycheck to paycheck, according to a recent LendingClub report.

But consistently tracking expenses isn't always easy if you're busy, or not used to fussing with apps or spreadsheets. 

That's why the 80/20 rule might work for you. Known as the anti-budget or "pay yourself first" budget, it's a bare-bones budgeting method that's easier to track than similar budget rules, like the 50/30/20 rule.

How the 80/20 rule works

The first 20% of your paycheck should automatically go toward investments, savings or debt repayment, starting with an emergency fund that covers three to six months of your expenses.

By doing this, you pay yourself first by putting money aside for your long-term financial goals. Ideally, most of the money should go to retirement investments, since financial planners commonly recommend putting at least 10 to 15% of your paycheck away for retirement.

The remaining 80% goes toward needs and wants, including food, rent and entertainment. But how you choose to spend that money is up to you. 

The important part of this rule is that no matter what, at least 20% of your income is going toward your long-term financial goals.

For best results, schedule automatic transfers from your checking account into a savings or investment account on payday. Most banks let you set up automatic transfers on their apps or websites. 

By doing this, you won't forget to set the money aside or be tempted to spend it — out of sight, out of mind.

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