Recommended Budget Percentages With Budget Categories

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Determining the right budget categories and budget percentages is not a difficult task.

One of the greatest budgeting fears is that you might get it wrong.  You fear that your allocation for groceries won’t actually allow you to make it through the month.  Unfortunately, this fear is one that can only be resolved by creating and experimenting with a budget.

budget category allocation

Finding the right balance

Another reason folks do not budget is because they believe the process to be a waste of time or a completely burdensome event.  Neither of these are necessarily true.  In this post I have provided some recommended budget percentages so as to simplify your budgeting experience.  Another thing that will help simplify budgeting using of one of the best pieces of budgeting software.

If you need more budgeting help you might want to check out The Secret to a Successful Budget.

Budgeting Categories, Budget Percentages, and General Information

What is a ‘budget’? It does not need to be a complex thing.  In fact a good definition for a budget is an intentional money plan.  Budgeting is about deciding both what to spend and what to save.  The process of budgeting is usually best preformed on paper, but can be done other ways as long as it helps you direct your spending and has a method to help you to be sure you don’t spend more than you earn.  Here’s how to make your first budget.

Why Budget? It will help you achieve your financial goals.  In fact, if you are not budgeting I think making financial progress will be difficult.

As you begin start of with a simple budgeting process.  Here are five ways to simplify the budgeting process.  You might also want to check out a sneak peak into our budgeting process because there are some suggestion for making a budget work.

Suggested Budget Percentages According to Budget Categories

While you will need to customize and personalize your family budget I thought I would share two suggested guidelines as well as my own percentages just to help you see how things work in my home.

The first suggestion source is The Total Money Makeover: A Proven Plan for Financial Fitness by Dave Ramsey (TTMM).  The second suggested source is Money Matters by Larry Burkett (MM).  For the Money Matters list I have used the $45,000 dollar category.  You should notice that MM has the tithe and tax excluded from net spendable income while TTMM excludes only tax.  Regardless they offer a helpful guide:

Total Money Makeover SuggestionsMoney Matters SuggestionsMy Family of Five Actual Budget Percentages
Charitable Gifts10 - 15%10%11%
Savings5 - 10%10%19%
Housing25 - 35%32%23%
Utilities5 - 10 %(included in housing)(included in housing)
Food5 - 15%13%10%
Transportation10 - 15%13%8%
Clothing2 - 7%5%2%
Medical/Health5 - 10%4%3%
Personal5 - 10 %13%7%
Recreation5 - 10 %6%5%
Debt5 - 10%5%0%

My total does not equal 100% other budget categories.  12% goes to health, life, auto, and disability insurance.

Did I just do my ‘acts of righteousness’ before men?

I’ll be honest, I was a little hesitant to put my charitable gifts on the list because of this verse:

“Be careful not to do your ‘acts of righteousness’ before men, to be seen by them. If you do, you will have no reward from your Father in heaven. “So when you give to the needy, do not announce it with trumpets, as the hypocrites do in the synagogues and on the streets, to be honored by men. I tell you the truth, they have received their reward in full. (Matthew 6:1-2 NIV)

Nevertheless, I included the amount because first I don’t see it as something that I necessarily want to boast about.  I would like to see that amount increase (and plan to make some changes in 2010).  Secondly, I think we do a disservice to our people when we make giving exclusively a private action.  The problem in Mt. 6:1-2 is not disclosure, but boasting and bragging.  Since this was not my intend I decided to include my giving information.  If there is any benefit to including that information it is so that people might praise their father in heaven and become more like their Father in heaven.

“You are the salt of the earth. But if the salt loses its saltiness, how can it be made salty again? It is no longer good for anything, except to be thrown out and trampled by men. “You are the light of the world. A city on a hill cannot be hidden. Neither do people light a lamp and put it under a bowl. Instead they put it on its stand, and it gives light to everyone in the house. In the same way, let your light shine before men, that they may see your good deeds and praise your Father in heaven. (Matthew 5:13-16 NIV)

How does your budget compare to the recommended budget percentages?  Do you think there are budget categories that are too high or too low? Do you think we should make it a habit to make our giving practices more public.

Photo by karindalziel.

For budgeting software recommendations see: best personal finance software.

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  1. Rob says

    My question is… how can Dave Ramsey recommend the Saving category be 5 to 10% when Baby Step Four is to save 15% for retirement? He has Retirement Fund under the Saving category in Work Sheet 5 on page 293. Any ideas?

    • CD says

      Baby Step 4 (save for retirement) comes AFTER paying off debt (Baby Step 2) and after saving 3-6 months expenses (BabyStep 3). So you would add the 5-10% from your debt payments to your savings giving you a total of 10-20%

  2. says

    I am self employed, I need to purchase a HD utility truck. My question is, am i better off obtaining a loan , or pay out of my savings ,for a used truck? Which will cut my savings in half ! As a small business owner how will i benefit either way??

  3. fred knapp says

    Why do all these so called christians by insurance cant you all see it as a lie straight from the devil it is insurance comp. have stolen over 100,000 cash from me and would not by me a bandage or fix a dent for me.They would turn me into a criminal thought LOL isn’t that a joke anyone that tells young people to by insurance and not just save there own money is doing the devils work

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