Budgeting can be very difficult for anyone regardless of their age or background. Finding the right budget and knowing how to allocate your monthly income is not an easy task. And if you want to focus on living more conservatively, it can be even more difficult. Fortunately, there is a way, with the budget pie concept, to make this a reality.
Download or print Budgeting Worksheet
Download or print Budgeting Pie
- Your largest budget category will be housing at 30% of your net monthly income. This includes utilities, rent/mortgage payment, home improvements, maintenance and insurance.
- Your next biggest category needs to be investments and savings with 10% being allocated to retirement and the remaining 5% being saved in your emergency fund.
- All of your expenses for transportation should not exceed 12% of your net monthly income. The expenses in this category include loan payment, gas, insurance and maintenance and any other transportation services.
- If you want to live a conservative budget, then keeping your food to 10% of your net income is the goal. If you have a larger family, it will be important to focus on coupons and other ways to save on groceries.
- Personal care including haircuts and clothing expenses need to come in at 5% while you need to keep entertainment – which includes eating out, gifts and attending events – to 4% of your net monthly income.
- The last 4 categories are charitable giving, debt, life and disability insurance and medical/dental expenses. Keeping each of these categories to 5% each will leave you with 4% for miscellaneous expenses like sports fees, gifts for others and whatever isn’t in the other categories.
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Categories: Budgeting, Financial, Planning