How Do I Determine the Right Budget Percentages? With that in mind, it is a good way to assess your overall budget and how much of your income you are spending on certain categories and make any changes that you want to. Your $1000 a month rent payment may not seem that much until you look at the percentage and realize that it’s 50% of your take-home pay. It’s also good because it shows you things in black and white.
It is handy to have a guideline to work towards and tweak it to fit your personal situation and finances as you go along.
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If there’s no one budget for everyone, why is it a good idea to use percentages to create your budget that works?Ī good reason to use percentages to create your budget is if you aren’t sure where to start.Ī lot of people have never created a budget before and simply don’t know how to allocate their money. He says to put 5 -10% of your budget in miscellaneous. Miscellaneous - It is a good idea to have a miscellaneous category in your budget, as there are always expenses that pop up that you can’t predict.
This will be for things like haircuts, clothes, shoes, etc. Personal spending - Dave recommends that you spend 5 – 10% of your budget on this category. This is for things like gym memberships, kids sports activities and entertainment like Netflix. This is your ‘fun’ or ‘entertainment’ category. Recreation - This budget category is one that Dave recommends you spend 5 – 10% in. Generally speaking, this means insurance that relates to your life rather than “extra” insurance such as home or car. Insurances include health insurance, life insurance, disability insurance, etc. Insurance - This should be 10 – 25% of your budget. Health - This category is for all health-related costs, and he says it should be 5 – 10% of your budget. These costs could be things like gas, insurance, car payments, parking, etc. He suggests that you spend 10% of your income on your transport costs. Transportation - This includes everything that relates to transportation. Housing budget percentage - This is a biggie, and one that many people may not be able to do straight off the bat – Dave Ramsey says that this category should make up 25% of your budget. The budget percentage recommendations for this category are 5 – 10 % of your budget. Utilities - Utilities are bills for things such as your gas and electricity. The grocery budget percentage is very important. The most common retirement accounts are an IRA or 401(k).įood budget percentage - Dave says that you should be spending 10 – 15% of your income on your food for the month, including both groceries and eating out. Saving - Dave Ramsey advises that you should be saving 10% of your income towards your retirement. Giving - This is an important category for Dave Ramsey, as he believes that you should always give, even when you are in debt. We can look at each different budget category and see what Dave means about each one. Ok so now we know what the budget percentages are, but what does that actually mean? Miscellaneous - 5 to 10 percent Budget Percentage Category Explanation Let’s take a look at the different categories and the recommended budgeting percentages to manage your money:
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