When it comes to the savings category of your budget, think about these three reasons to save: emergencies, big purchases and wealth building. How much you’re putting in savings each month depends on several things! 1 But this is a great example of how a percentage or even an average shouldn’t set a standard for you. If you’re wondering what’s typical here, the average American saves around 9% of their income. (Aka how to win with money.) The Baby Steps tie in with how much you should spend in a few of these budget categories-especially savings. This is the proven, guided path to save money, pay off debt, and build wealth. Heads up: I’m about to talk about the 7 Baby Steps. So, before we dive in, here’s an overview of the budget categories we’ll cover in this article: Look up your own! Open your online bank account or get out those bank statements and see what your past spending reveals. Or maybe a category is like a playlist, and the lines are like songs.Īlso, if you’re reading this as you set up your first budget, don’t stop with the numbers I’m about to give you.
If those words are new to you, think of a budget category as a folder, and the budget lines as files inside it. Let’s break down some national averages and budget percentage recommendations for common budget categories and budget lines. Guidelines for Setting Your Budget Percentages So, I’ve pulled them together with other helpful info to guide you as you’re setting up (or fixing up) your budget! Are you ready for this? Because your life isn’t one size fits all! How much you should spend on this and that in your budget can vary depending on your income, household, location, goals, lifestyle-so many things.īut there are a few standards to follow. Sometimes even a combination of both methods can be a reasonable and right choice.If you’ve never budgeted before-or you’re wondering how your spending compares with everyone else’s-you might wish you could see some recommended budget percentages, national spending averages, and other helpful stuff like that all in one place.Īnd listen, I’m not about to give you a one-size-fits-all budget percentage guide. There is no right or wrong answer here, just pick the method that fits your particular debt situation. Dave Ramsey is suggesting using a debt snowball method in all cases, but I will offer to consider the debt avalanche method as well. “While, again, no percentage is suggested, suggests to throw everything you can at this super important money goal. “The article ends with the debt category, and suggests allocating the money you are able to save on your spending and from boosted income toward paying off your debt,” Kayikchyan said. “These categories are places to prioritize cutting your budget, especially on your way to building financial security and stability.” Debtĭebt is a burden for almost all of us, so it’s critical to make ample room in your budget to tackle it. “For miscellaneous categories about 5% of your take-home pay is recommended,” Kayikchyan said.
The blog highlights that the average American household spends $3,568 a year here, or about $297 a month. Here’s where you can (like it or not) look to cut back. Lifestyle or entertainment, personal spending money and miscellaneous are the next categories discussed. Make Your Money Work for You Lifestyle or Entertainment, Personal Spending and Miscellaneous This will be a good strategy for someone who is using food or grocery delivery services.” But in reality, preparing meals at home versus eating out will save you some good money. For the food category, buying in bulk, couponing and chasing deals is one way to save. “Food, along with housing and transportation, is considered the largest item in the household budget. “While there are no set percentages offered here, the article gives some national averages of what Americans spend on groceries each month: singles age 19-50 spend $314 to $337, couples age 19-50 spend around $685 and families of four spend around $971,” Kayikchyan said. The next budget category discussed in the Ramsey Solutions article is food, and surely we all need that! But food prices have risen at the highest rate we’ve seen in decades. “While this can sound a little controversial and opposed to the ‘pay yourself first’ budgeting method, the article emphasizes giving as a great act and being good for everyone, and recommends giving 10% of income,” Kayikchyan said. Charity is an important part of the human experience, and many people want to allot for it in their budgets.