#BUDGETING HOUSEHOLD EXPENSES FULL#

Perhaps you get full medical coverage through your employer, and your medical expenses are below the 8-15% guideline that means you will have more money to divvy up among the remaining categories.

That means if you spend the full 10% on personal & miscellaneous spending, you’ll need to make cuts somewhere else. You’ll notice the percentages are presented as ranges, not fixed amounts. Each person needs to work with his/her own finances to create a spending plan that adds up to 100%. Want even more control over your budget? Here’s a detailed breakdown:

#BUDGETING HOUSEHOLD EXPENSES FOR FREE#

For people who cannot attend in person, the seminar materials are available to download for free on our website. We also offer a deeper set of flexible guidelines as part of our free Power of Paycheck Planning educational seminars. These guidelines are more realistic and comprehensive than the standard 50/30/20 plans, and they are useful for quick seminars, because the percentages add up to an even 100%, avoiding potential confusion.

This means that one’s discretionary spending or “wants” are only one part of the 25% of one’s funds that are set aside for expenses. In this spending plan, the “Expenses” category that makes up 25% of one’s spending includes groceries, cell phone bills, entertainment, charitable donations, and other things that don’t fit into the other categories. It’s really only in the remaining 30% of the plan that you have the ability to make adjustments and cuts to stay on track.īut there’s a better way to categorize your budget. You’ve got your fixed necessary monthly expenses you can’t easily reduce, and 20% that you’re using to pay off debt and potentially build savings. The essential thing about our take on the 50/30/20 plan is that 70% is fixed. Someone just starting out might be devoting most of that to repaying debt and a little bit for savings, but over time we want to see debts paid off and more of that 20% saved. Somewhere in this 30% is your discretionary spending, or “wants” but they certainly won’t make up the entire 30%.įinally, there’s 20% for debt repayment and savings. Then the 30% are expenses you have some control over, and will want to reduce if you can. In our spending plan, 50% of expenses are fixed things that don’t change from month to month, like rent and certain utilities. It’s really more for flexible expenses vs. We do offer a budget worksheet with a 50/30/20 plan on it, but we don’t count the 30% as “wants”. This is wildly unrealistic-it’s quite irresponsible to tell someone to set aside nearly a third of their income for wants. And eventually, hopefully, that 20% will someday be entirely devoted to things like savings and investments.Īnother problem with the 50/30/20 plan as expressed above is the “30%” for discretionary spending. The “20%” for savings is a worthy goal, but that’s not where our clients are-some significant part of that 20% will need to be used to pay down outstanding debt. There is nothing set aside for debt repayment, and for everyone we serve, that’s an essential category. The first problem with this 50/30/20 plan is what’s missing. When it’s put that way, we strongly urge people to avoid this system, which for most people will be unrealistic. We prefer to give more comprehensive advice.Īnother suggestion is to divide your income with a 50/30/20 spending plan: set aside 20% of your income for savings, 50% for necessary living expenses, and 30% for discretionary spending.

On a basic level, this is sound advice, but it’s easier said than done in a lot of cases. We’ve seen it suggested that you should adopt a simple 20/80 plan: save and invest 20% of your income and live on the other 80%. The trend seems to be toward simple advice.

#BUDGETING HOUSEHOLD EXPENSES HOW TO#

With the economy in turmoil, more experts are proposing different ideas about how to financially plan for their household spending. That being said, here are our best recommendations for managing your household budget. Over the decades we’ve spent educating consumers about managing their personal finances and conquering their debt, we’ve seen countless different strategies for household financial plans.

Budgeting household expenses