This is the time of the year when everyone talks about creating a budget to get their year off to a good start. But how many of you have wondered how much should be budgeted in each expense category? Listed below is a standard chart for the major expense categories. Your budget may vary by a few percentage points but you should track your spending for a month and strive to get within a close range of the percentages listed.
I realize that tithing is personal and not everyone does it or believes in it but if you do it should definitely be included in your budget or your budget will not be realistic because a chunk of money will be missing. If you do pay your tithes, it should be based on your gross (pretax earnings) while all other percentages are based upon your net (after-tax earnings) so this may cause you to have to do a little more adjusting. No system is going to be perfect but your money matters and you have to put forth the effort to take control of your personal economy.
Tithes – 10% Remember this is based on your gross (pre-tax) earnings
Savings – 10% Although many of us think that we can’t afford to save money, the truth is – we can’t afford not to save for a rainy day, these funds should go toward your cash reserve. This does not include retirement savings since they are generally made pretax through your employer.
Housing – 35% This includes your utilities, home repairs and home insurance as well as mortgage/rent
Transportation – 15% This category includes your car payment, fuel, auto insurance and auto repairs
Groceries – 10% You gotta eat! This is one area where you can have some control by clipping coupons from the Sunday paper or choosing off brands to stay within budget.
Insurance – 5% This is not the time to cut back on something as important as protecting your life and your income, this excludes company provided benefits. If you pay for personal medical coverage, this amount may be significantly higher therefore you will need to cut back in another area.
Personal Care – 5% For the sake of everyone around you, set aside some funds for your personal care. Although this category also includes household items like toilet paper, paper towels and cleaning products, don’t forget that it is ok to be a little selfish.
Education – 5% Whether you are planning for your kids college or needing to sharpen your saw, you should have some funds set aside for education. Our workforce is becoming more and more competitive therefore you need to constantly learn new things about your current industry.
Entertainment – 5% I don’t recommend that anyone forsake fun for frugality. Life is short and you only get one shot so make sure you take some time to smell the roses. There are lots of free and low-cost events that you can attend or save this amount toward a vacation that won’t require you to use a credit card.