Household Budgeting Percentages
Knowing the typical household budgeting percentages, or how much to budget for each major category, can help provide a guideline when planning your monthly budget, especially if this is the first time. Of course, you must take into account that money management and budget percentages are just that, guidelines, and every family's situation is unique; percentages typically vary based on income level and family size. Assuming taxes, health insurance, and retirement contributions are taken out of your gross pay - all percentages below are only based on net pay. Housing: This will be the biggest chunk of your budgeting percentages. Typically varies between 20 to 30% of your net pay. Includes maintenance, tax and insurance. Can vary a great deal depending on where you live, and if you actually rent instead of own. Utilities: About 10%, at the most. Varies mainly depending on the heating/air conditioning requirements where you live. Also depends on whether some utilities like water and trash are included in your housing cost (if you rent your dwelling, these are sometimes included in the rent). Food: About 15%. Typically, about two-thirds of that is actual grocery shopping bills, while the balance one-third is the eating out expenses. Transportation: About 20%, at the most. Includes vehicle loans, if any, maintenance, insurance, gas and any other transportation costs. Typically, about half of transportation expenses go towards vehicle loans, a quarter go towards maintenance and insurance, and the rest for gas. Varies mainly depending on how many cars are there in your household, if there is a loan, and how far you drive back and forth to work everyday. Medical: About 5%. Includes copays, deductibles and other costs not covered by health insurance. Varies mainly depending on what the out-of-pocket costs for your health insurance are, and if you have any special conditions that warrant more frequent visits to the doctor or pharmacy. On a side note, it is a good idea to get these deducted pre-tax from your gross pay, by taking advantage of the flexible spending accounts. Other ExpensesCloths/Personal Care: About 5%. Includes personal care items alsoEntertainment: About 5%. Includes things like movies, bowling, etc. Other Debt Payments: About 10%. Mainly includes credit card debt, or other loan obligations not already included above. Varies depending on how much money you currently owe. SavingsIf you add up above, you may notice that we just got to the 100% mark - does this mean there is not going to be anything left to save? Not really. The discrepancy is mainly because of the potential variation in the above percentages, depending on various factors as already included.What you need to do is - to set yourself a target of saving at least 10% of your net pay every month, by adjusting any of the other percentages above (except debt repayment), to suit your specific situation. 15% of savings goal is better, if you can do it. If your debt is too high, with high interest rates, you may want to tackle that first, before getting into full savings mode. Best way to get the right figures for youThe best way to get the right budgeting percentages for you, is to track your spending for a month or two (or work back to the past couple of months, to see how you have been spending). Armed with this information, draw up your own percentages which make sense to your unique family situation, using the above budgeting percentages as a rough guideline.Finding it difficult to get there? A personal budgeting software can help. Once you have your household budgeting percentages, keep checking back on them every month, for 2 to 3 months, to see if your allocations are reasonable enough for your situation. If something needs a slight adjustment, correct the corresponding budget amount. And once you have your perfect budget in hand? Stick to it! Next.. Budgeting Living Expenses >> Try a Budgeting Software for FREE Return from Household Budgeting Percentages to Budgeting Money Home Back to Credit Card Debt Relief Home New! CommentsHave your say! Leave a comment in the box below. |