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. Show Hey! This is that place! And listen, we aren’t about to give you a one-size-fits-all budget percentage guide. 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. But there are a few standards to follow. So, we’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? (Yes.) Here. We. Go. Guidelines for Setting Your Budget PercentagesLet’s break down some national averages and budget percentage recommendations for common budget categories and budget lines. Start budgeting with EveryDollar today! If those words are new to you, think of a budget category as a folder, and the budget lines as files inside it. Or maybe a category is like a playlist, and the lines are like songs. (Hm . . . maybe you should make a good money playlist to get you in the budgeting mood.) And one more thing: If you’re reading this as you set up your first budget, don’t stop with the numbers we give you. Look up your own! Open your online bank account or get out those bank statements and see what your past spending reveals. GivingWe believe in giving. Always. Tithing to your church, donating to charities, supporting worthy causes—even if you’re in debt. Generosity shifts the focus off of us (our problems, our financial shortcomings) and reminds us of our blessings. Giving is good for you and for others, and we recommend giving 10% of your income. SavingHeads up: You’re about to hear us mention the 7 Baby Steps. A lot. This is the proven, guided path to save money, pay off debt, and build wealth. (Aka how to win with money.) If you’re wondering what’s typical here, the average American saves around 9% of their income.1 But this is a great example of how a percentage or even an average shouldn’t set a standard for you. How much you’re putting in savings each month depends on several factors! When it comes to the savings category of your budget, think about these three reasons to save: emergencies, big purchases and wealth building. Since budget percentages for these can vary, let’s talk through each one. Emergencies: Set aside $1,000 in the bank right away. (We call that a starter emergency fund, or Baby Step 1.) This puts a cash buffer between you and those life happens moments. If you’ve got debt (which we cover later) keep that emergency fund at $1,000 until you’re debt-free (which is Baby Step 2). When the debt’s gone, you need to save up what we call a fully-funded emergency fund (Baby Step 3). This is three to six months of expenses and will protect you against bigger emergencies, like job loss or your car going kaput. It’s hard to tell you what percent of your income to put toward your emergency fund. Basically, if you don’t have one yet, you need to cut back on any extras and get intense on stuffing cash into your savings until you do! Big Purchases: Another reason to put money in savings is if you’re planning any big purchases. This includes saving up for a reliable car to replace the one you know is on its last legs (er . . . last tires?). The key word here is know. When your car breaks down, to your complete surprise, that’s a job for the emergency fund. But when you know your beater is hanging on by duct tape and prayer, that’s when you start saving for a replacement. Home repairs work the same way, really. Some are surprises. Some aren’t. So, keep your eyes on your stuff so you’ll know when to put money in savings for those necessary big purchases. What about the fun big purchases? Like vacations, new furniture or that boat to make all your fishing dreams come true? You should save up cash for these too! But get to the luxuries after you’re debt-free and have some solid financial security. (The boat can wait!) Again, there isn’t a set percentage here. Just remember—the more money you throw at a goal, the quicker you get there! Wealth Building: The final reason to save up money is for wealth building. Once you’ve paid off your debt and are sitting on top of that fully funded emergency fund, it’s time to start saving for the future! This time, we have a solid percent for you: At this stage of the game, you should be investing 15% of your gross income for retirement savings. Pro tip: Learn more about walking the 7 Baby Steps. FoodEating in, eating out. When we’re not making or consuming food, we’re thinking about food, right? It’s no wonder this budget line is one of the hardest to wrangle. While we don’t have a set percent here, we can give you some national averages of what Americans spend on groceries each month in the “moderate” spending range:2
What about restaurant spending? The average per household is $2,375 a year (around $198 a month if you divide it equally).3 As you start budgeting, these numbers might help—but know that the size of your family, any dietary restrictions, and your lifestyle will all affect your spending here. As you budget from month to month, pay attention to what you plan versus what you normally spend. Are you over budget? Why? It could be that your expectations are unreasonable—or that your spending is! Both can be fixed. You’ll just need to work at it. Pro tip: Get the Rachel Cruze Meal Planner and Grocery Savings Guide.
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