Last month, I began discussing the basics of budgeting and included a spreadsheet for download that would allow for seeing all one’s bills and expenses in one place. Many of you downloaded it and/or shared the posts (thanks, btw!). Two things that were mentioned in the comments was how hard it is to stick to a budget and knowing how much to budget for certain things each month.
I completely understand how hard it is to stick to a budget. For some reason, for me anyway, it was easier to stay on budget when I made far less than I do now. Granted, I had fewer expenses, but I also did a better job of distinguishing between ‘wants’ and ‘needs’ than I do now so it seems. And with price fluctuations, sales, and seasonal variances, its also hard to budget specific amounts sometimes, especially for food, gasoline, and utilities.
So … I went looking for some guidelines on how much percentage-wise your budget should be split up. Dave Ramsey has this breakdown listed in worksheets at the end of his book Total Money Makeover (affiliate link to the newest edition btw)…
If you add it up for the low end and high end, those percentages equal 82% and 147%, so you pretty much have to adjust as needed for your needs … oh, and Dave also recommends that you over-calculate your grocery budget.
He also noted that it takes awhile to perfect a budget, so if you go over on the first month, don’t be discouraged. Tweak as needed until you get it right.
Besides DR’s budget guidelines, I also came across this blog post with several other budget % breakdowns at A Bowl Full of Lemons while searching to see if I could find other budget breakdowns. Another option is the 50/20/30 Guideline over at LearnVest which is great for singles as well as couples. All of these are great guidelines to use, just pick the one that works best for you at this stage in your life.
Here’s a breakdown of my current budget. Some months I get it right and stay on track; others, well, I’m human 😉
Housing/Utilities – 15% (I don’t live alone, so this number is way smaller than it would be if I lived solo, which I’m hoping will happen next year)
Transportation – 26.5% (this is my biggie because I commute 70 miles RT daily M-F and pay extra every month on my vehicle loan so it’ll be paid off sooner; hopefully just another two and a half years to go based on the current payoff figure!)
Food – 10% average (mostly on groceries; I rarely eat out & stick to discounted happy hour time periods at Sonic and DQ when I do stop for a drink/snack going to/from work)
Medical – 2% (Average based on 12 months. Quarterly Rx refills + OTCs primarily; excludes dental work as that just has to be squeezed in when it hits; I’ve been lucky this year in that I haven’t maxed out my dental coverage yet like I have by midyear the last three years!)
Charity – 2% (I know, I should donate more … and plan to increase this one over time)
Clothing/Personal – 11% (goodness, this is one I tend to blow periodically)
Travel/Blog/Photography/Misc – 11% (another one I tend to blow periodically)
Savings – 15% (sometimes more, sometimes less)
Debt – 7.5% (excluding my car loan; I have one credit card that regularly offers 0% balance transfers that I use to finance dental work when I don’t have the full out of pocket amount for as well as the occasions when I do a little too much retail therapy/have unexpected expenses hit; that balance is currently at $1,500.)
I’m in the process of adjusting these percentages right now to meet some financial goals (savings, paying off the last $1,500 on the BT I have right now) as well as ‘increasing’ the amount on utilities to account for living solo sometime in 2015 and paying it all by myself. For now, the difference in what I pay and the new % will go into the ‘house’ savings fund I have set up.
Another thing that makes it hard to set a budget is if you’re paid hourly, especially if you aren’t always guaranteed a flat 40 hours a week. I’ve been lucky that all three full time jobs I’ve had were all salaried, so with exception to the first check of the fiscal year when insurance rates change and any step raises/COLA increases/longevity bonuses are added in and the two ‘extra’ checks I get a year where insurance coverage premiums isn’t withheld (I’m paid every other Friday, so two months of the year I get a third paycheck), my take home pay always the same.
What I’d recommend is taking the last several months’ worth of paystubs and calculating the average number of hours worked and using that as a basis to budget by if you’re unable to do side jobs or have other ways of generating the lost income on the weeks when hours are cut.
Questions? Want to add to the discussion with what budgeting percentage guidelines you stick to? Topics you’d like to see in upcoming budgeting posts? Leave a comment below 🙂