Cashology by FNBO

Debt-Free Budgeting: The 80/20 Rule

Episode Notes

In this episode of the Cashology Podcast, Justin sits down with Julia Conover, Branch Manager at FNBO, to discuss a simple yet powerful budgeting tool: the 80/20 rule. Julia walks us through how this method prioritizes 20% of your after-tax income for savings, while the remaining 80% covers everything else. This flexible approach to budgeting can be easier to follow than the more detailed 50/20/30 method and works well for individuals who prefer not to overthink spending.

Learn practical ways to stay committed to saving by setting up multiple savings accounts, automating your savings contributions, and regularly reassessing your financial goals. Whether you’re looking to build savings or just want a simpler approach to managing your budget, this episode might help you feel more in control of your financial future.

Listen here and follow @CashologybyFNBO® on YouTube for more!

Episode Transcription

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You're listening to the Cashology

podcast by FNBO,

 

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a place dedicated to helping you

become more financially savvy every day.

 

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It's a little like school,

but your only homework is living your best

 

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financial life.

 

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I'm your host,

Justin, and class is now in session.

 

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Welcome back to the Cashology

 

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podcast, a place where we dive

deep into personal finance

 

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to bring you actionable insights

and real life wisdom.

 

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So in this episode,

we talk about the 80-20 rule of budgeting.

 

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And so you might be familiar

in a prior episode.

 

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Check out episode three of this podcast.

 

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You may be familiar with the budgeting

method called the 50-20-30 rule,

 

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where you allocate 50% of your budget

to needs

 

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20% to savings and debt and 30% to your wants.

 

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And so we touched on this

a little bit in this episode, but,

 

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kind of bringing in a new flavor

of budgeting.

 

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And so Julia Conover,

who's a branch manager here at First

 

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National Bank of Omaha, joins me

in this episode and gives us some insight.

 

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And, the inner workings of what

the 80-20 budgeting rule

 

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is, how to advise it, how to apply it,

and kind of the flexibility it brings.

 

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And so, I had a really great conversation

with Julia.

 

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She's absolutely wonderful.

 

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I can tell she's passionate

about banking and helping

 

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customers in near  

and far reach their financial goals.

 

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So I hope you enjoyed this episode

with Julia Conover

 

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talking about the 80-20 budget rule.

 

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Well, hey Julia,

thanks for joining the podcast episode.

 

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It's really great to have you.

 

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JULIA  

Thanks.

 

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I'm so happy to be here

I appreciate the invite.

 

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JUSTIN  

Yes! We love having guests.

 

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So kind of just as we get started,  

can you share just,

 

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with our listeners a little bit

about your background at the bank?

 

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JULIA  

Absolutely.

 

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So, in total,

I've been with the bank about eight years.

 

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I started here as a teller,

and then I worked my way up.

 

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And currently a branch manager.

 

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So I've worn a lot of different hats

in my time here.

 

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JUSTIN  

For sure.

 

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Absolutely. Well, we love it.

 

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So today's topic is,

the 80-20 budgeting rule.

 

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So let's just go ahead and dive right in.

 

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Can you share, Julia, what the 80-20 rule

is and the pros and cons of using it?

 

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JULIA  

Yeah, absolutely.

 

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This is actually one of my favorite

budgeting rules.

 

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It's one that I use personally.

 

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And so I'm super happy to talk about it.

 

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So the 80-20 rule is a budgeting method

where

 

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20% of your after tax

income is prioritized for savings,

 

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and the remaining 80%

goes to everything else.

 

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So I love this one personally,

because there's no different

 

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allocation

between your needs and your wants.

 

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It's very similar to the 50-30-20 rule.

 

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But you don't have to do that

extra break down.

 

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So it makes it a lot easier.

 

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I think it's also super flexible,

easy to follow.

 

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I think the big thing for most people

is that you don't have

 

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to put that microscope

 

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against it too much on scooters

or whatever that might be for your wants.  

 

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For me

personally, that's a big part of it.

 

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JUSTIN  

Oh, I'm right with you.

 

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I was like, you're calling me out,

Julia. You're calling me out.

 

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JULIA  

Yeah you know who doesn't spend

a little too much?

 

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Right.

 

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Especially with the pumpkin spice season.

 

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JUSTIN  

Oh, it's back?  

 

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JULIA  

Yeah. Probably not the best

method for somebody,

 

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though,

who is prioritizing paying off debt.

 

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But if that is not something

that's in your goals list.

 

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Really, again, it's a great easy thing to follow.

 

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JUSTIN  

I like that a lot.

 

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And I like how you said you

 

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you use this version of the tool,

because I think I also do as well.

 

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I don't know if I've ever really thought

about, ooh, what what percentages

 

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am I actually saving?

 

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But I love, like,

this simplicity of the 80-20.

 

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I can't think too many plates

spinning at the same time.

 

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Is not going to work for Justin.

 

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So I really like

the 80-20 is very simple.

 

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Two buckets of kind of where

your money goes.

 

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So Julia, what tips can you give to those

 

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considering the 80-20 rule

to help them remain committed to saving?

 

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You know, 20% of,

 

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I imagine, the after tax income or,

you know, their take home pay.

 

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JULIA  

Yeah, absolutely.

 

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So first and foremost,

I think the biggest thing

 

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for people to remember is that this 20%

can go to a lot of different

 

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savings goals and then to a lot of

different savings buckets.

 

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So it's not that you have to

just make sure you're but 20%.

 

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And it's like with savings account rate,

you can disperse this between your 401 K.

 

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And if you're doing,

you know, little investing account,

 

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or if you just have multiple savings

accounts for your different goals.

 

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However, it is best going to keep you

organized is what I would say.

 

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And a big thing

when thinking about savings

 

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is that you have to make sure that your

goals are specific and they're measurable.

 

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So, you know,

I want to save X amount of dollars

 

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for my vacation to Mexico next year.

 

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So I need to have this amount of dollars

 

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saved by the state

in order to pay for that.

 

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And then, you know, open a separate

 

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savings account for that individual goal,

whether that be

 

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a liquid savings or whatever else

kind of account that might be.

 

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So that that way

you can also like progress.

 

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check yourself throughout that time

up to your goal, right.

 

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check yourself throughout that time

up to your goal, right.

 

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To make sure if you're missing

the mark that you can add more

 

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or if you're over saving that, maybe

you can allocate that to another goal

 

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that isn't yet on your list,

 

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or wasn’t yet a priority

and then make your savings automatic.

 

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I cannot stress this enough.

 

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One of our investments,  

planning reps, here

 

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when I was,  

brand new to the bank, had talked to me,

 

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and he said something

that really stuck with me.

 

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He said, pay yourself first.

 

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So, when I go to divvy up

my, like, direct deposit,

 

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I set a certain amount of savings

to go to my 401K,

 

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to go to my different investment accounts

and to go to my little savings bucket.

 

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But I never even see that money,

like my first national

 

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just pops it right into my savings

so I don’t have to do anything.

 

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I think.

 

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I don't know about everyone,

but for me personally, sometimes

 

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when you see a bucket of money

and then you have to take 20% of it away

 

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and put it other places, it's like,

oh, well, I could be doing this with it,

 

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or I could be doing that with it,

or I could go buy that pair of shoes right?  

 

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JUSTIN  

Yes!

 

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JULIA  

So if you just never look at it

and it just goes in the savings accounts

 

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automatically, I think it makes it

so much easier to just pretend

 

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that it's not there, but you know, that

it is contributing to those goals.

 

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JUSTIN  

Yes. Out of sight, out of mind.

 

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JULIA

Absolutely!

 

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JUSTIN  

I operate the same way of, in this 80-20

like, that 80% is the money I get to spend.

 

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I have no idea where that 20% is going.

 

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Right?

Like I've never seen it before in my life.

 

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Of course, going to retirement.

 

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But I liked what you said

about multiple savings accounts

 

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and kind of like tracking,

because I don't do that.

 

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But you know, I think today I think of

one savings account and then I'm like

 

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dividing out of like, oh, this is the trip

that we want to take to Mexico.

 

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This is, you know, our Christmas vacation

kind of thing.

 

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And so it's all lumped in.

 

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But I really think

I'm going to take that nugget of,

 

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okay, let's just do is set a separate

account and then track that progress.

 

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And it's, it's that measurable component

of being able to see your kind of progress

 

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as time goes

on. I really love that.  

 

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JULIA  

Yeah, absolutely.

 

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And for both places, I mean, I know here

at First National, if you want

 

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10 savings account, you can have 10 savings accounts.

 

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and they can all be those high yield,

you know, paying accounts.

 

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So most places are going to give you that

option as well, which I think it's nice.

 

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We try to make it easy for us

right.  

 

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JUSTIN  

Perfect. We love it.

 

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So tell me, how rigidly should a guest

be following the 80-20 rule?

 

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Like so.

 

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If we have listeners that are in like

 

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absolute rule followers, what's

your kind of recommendation to them?

 

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JULIA  

So I think it just goes back

to remembering that this is an easy

 

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and flexible plan.

 

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I mean, it

is that way for a reason, right?

 

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Because life happens.

 

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Life happens.

 

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And there aren’t going to be times

 

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where you're going to have to make

 

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adjustments to the situations

that are going on in your daily life.

 

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It is a guide to help you

reach your savings goals.

 

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It is not hard and fast rules.

 

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You can adapt to this as you go

and as challenges may arise.

 

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Or, you know, unexpected bills.

 

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I recently had to pay my insurance

deductibles or my routes.

 

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I know a lot of

people in the same situation. Right?

 

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So that changed my allocation

for some of those goals a little bit,

 

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because I had to move a little bit

more of that money to, to pay that over.

 

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So some months

you're going to have things like that

 

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where you have to take a little bit out

and allocated it to something else,

 

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and then other months,

you know, you have an a surplus.

 

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You fill that gap

and put it back in those holes.

 

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And again, that also goes back to

when you have your separate buckets

 

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and you can check yourself,

you know, as you go,

 

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maybe monthly or biweekly

however you choose to do that.

 

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So when you do have a surplus months,

you can see where do I really want this

 

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to go to fill in the gaps

in my problem month?

 

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JUSTIN  

Yeah, I like that flexibility

because similar

 

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scenario of, you know, a few months ago

we bought a new to us home.

 

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Right.

 

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And probably leading up to it,

 

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very diligent 80-20,

maybe even more like a 70-30.

 

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Right? Saving for that down payment.

 

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And then, man, we buy the house

and it's like, oh, now

 

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we're doing like 99 one

because we have to like buy paint.

 

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We have to like buy new furniture

and like all of this stuff.

 

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So that flexibility, I think is kind of

 

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the 80-20 rule is like meeting you

where you are in the moment.

 

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And I think the the key component

is constantly reflecting and reassessing

 

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of like for us, you know,

where like a 95, 99, 1% saving of all right,

 

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well then at the end of this month

we need to

 

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we need to recalibrate and figure out,

okay, what's

 

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next month going to look like?

What are we kind of doing there?

 

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So it's a constant check in

but it's flexible for what you need.

 

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JULIA  

Absolutely. I like how you said new to us house.

 

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I've been in that situation as well.

 

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And you know what we don't think about

when you go from an apartment to a house

 

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is a washer and dryer

and a lawnmower, right?

 

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There's just things

that you just don't plan for.

 

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And so

and that's where the flexibility is just.

 

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Delicious.

 

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JUSTIN  

So, Julia, is there

 

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anything else you'd like to share

with our listeners about the 80-20 rule?

 

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JULIA  

So maybe just a quick recap, right.

 

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The 80-20 rule is simple.

 

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It is flexible. It's effective. Right.

 

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It is something

that is truly going to work

 

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if you continue to maintain

that focus on doing it.

 

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And because it doesn't require you

to track that needs and wants spending,

 

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it's definitely going to work better

for somebody who doesn't have a focus

 

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paying off debt.

 

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JUSTIN  

The listeners

that maybe are a little bit more local,

 

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and maybe even those

that are a little bit further away.

 

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Is there any way that they could

potentially reach out to you?

 

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Do you have any recommendations on

resources of getting them to connect it,

 

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to better understand the 80-20 rule here.

 

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JULIA  

Yeah, absolutely.

 

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So, in retail banking,

I mean, that's the heart of what we do.

 

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We are here for advice and guidance,

 

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to customers and non-customers who maybe

want to consider being customers as well.

 

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You can reach us either by calling

 

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the customer care center

or hopping into a branch.

 

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Here up at 214 Maple,

which is where I, typically reside.

 

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You can reach us at our branch phone number

of (402) 602-8850.

 

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Or pop in and sit down

and chat with the banker because, like,

 

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I said, you know,

this is what we're passionate about

 

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is providing our financial education

to our customers.

 

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We especially, you know,

when I started working at the bank,

 

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I didn't have any financial knowledge.

 

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It's not something that my parents

had to provide to me.

 

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And a lot of people are in that situation.

 

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And just because you didn't grow up with

it doesn't mean that you can't

 

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arm yourself with those tools

to have a successful financial future.

 

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So come see us.

 

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Call us.

 

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Email us. However,

it is comfortable to get ahold of us.

 

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We want to talk to you.

We want to see you.

 

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JUSTIN

Perfect, and we'll make sure we get

 

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those resources, links, contact

information in the show notes.

 

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Again, Julia,

thank you so much for joining the podcast.

 

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JULIA  

Yeah! Thanks for having me

Justin! You have a wonderful one.

 

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JUSTIN  

For more resources,

check out FNBO.com or subscribe

 

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to us on YouTube

or on your favorite podcast platform.

 

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Consider giving us a rating or review

as they help us get the word out.

 

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And remember, our discussions are designed

to inform and inspire.

 

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For personalized advice,

we always recommend consulting

 

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a financial professional.

 

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00:12:28,547 --> 00:12:32,051

Until next time, keep on making smart

financial choices.

 

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And thanks for listening to the Cashology

podcast.

 

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Member FDIC Equal Housing Lender. Podcasts

are for informational purposes only

 

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00:12:40,059 --> 00:12:43,162

and not intended to provide

specific advice or recommendations.

 

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00:12:43,395 --> 00:12:44,363

When making decisions

 

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00:12:44,363 --> 00:12:47,867

about your financial situation, consult

a financial professional for advice.

 

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00:12:48,167 --> 00:12:52,238

Podcasts are not regularly updated

and information may become outdated.

 

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Deposit products are offered by First

National Bank of Omaha, member FDIC.

 

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00:12:56,575 --> 00:13:01,313

Investment products are not FDIC insured,

not a deposit or other obligation of the bank.

 

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00:13:01,313 --> 00:13:03,449

Not insured by any federal government

agency.

 

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00:13:03,449 --> 00:13:05,918

Not guaranteed by the bank, may lose value.

 

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The Cashology Podcast

copyright First National Bank of Omaha.