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Jul 27

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Basic Budget Amounts

basic budget amounts

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Basic Budget Amounts.

Awhile back, I was terrified of the word “budget“. Since then, I feel like I have made leaps and bounds to where I am today. My mom loves to tell how in high school, I would literally throw money away. I am so embarrassed to admit this, but it’s true. I couldn’t be bothered with change. I would just toss it. Isn’t that awful? It gives me shivers just to think of it! Now, I try to look at my money from every angle and make sure we’re spending and budgeting wisely.

Here is a formula to use to create your basic budget amounts:

  • 25% of Income = housing and debt, including mortgage/rent, credit cards, auto loans, and student loans.
  • 21% of Income = living expenses, including food, clothing, utilities, gas, medical and free spending.
  • 25% of Income = taxes.
  • 15% of Income = savings.
  • 10% of Income = tithe/giving.
  • 4% of Income = insurance, including life, health, auto.

 

For more budget tips..

  • A great formula for unexpected cash (gifts or bonus) is this: 1/3 each to past debt, future savings, and present improvements or major purchases.
  • A simple way to determine how much you should be saving for your retirement nest egg is 20 times the amount you need to live on per year. So, if your living expenses for the year total $75,000 you should plan to have at least $1.5 million for retirement.
  • Check out Dave Ramsey’s Gazelle Budget tool. It will help you identify problem areas and get on the right track.

 

 

Basic Budget Amounts.

 

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