Budget Percentages

Where Did The Money Go?

There are many advice on how we should spend a percentage of our income and budget accordingly. I've been trying to fit my budget on these guides, but I've never been able to fit the profile. I've realized that budget percentages only serve as a guide on what's normal for us to spend. Each of us have different lifestyle, conditions, needs and wants. It's almost impossible to fit in perfectly unless we live according to the ideal of the budget.

For example, most parents who live in the USA send their children to public school. So, it's natural that most parents don't have a budget for their children's education. But for parents who send their kids to private schools, or who live in countries where schools aren't free, will have their children's education on their budget.

Dave Ramsey Budget Percentages

Charitable Gifts 10-15%
Savings 5-10%
Housing 25-35%
Utilities 5-10%
Transportation 10-15%
Food 5-15%
Clothing 2-7%
Medical/Health 5-10%
Personal 5-10%
Recreation 5-10%
Debt 5-10%

What we can do is determine which budget percentages we can use as a guide to determine if we are overspending. Dave Ramsey's Budget Percentages is a good start. We can use parts of it as a guide. For example, spending 25%-35% of our income on housing. If we make $4,000/mth, then we can spend $1,400 on housing. If we'd like to save, we can budget housing and utilities together so that housing and utilities is budgeted $1,400/mth. That is an ideal situation. People that make $2,000/mth will have to find a place that rents $700/mth.

The rest, we have to list what we spend on monthly and see how much it takes up from our income. Next, we will cover a topic on determining which cars are affordable according to our income...