Posted: 3/18/2007 1:44:09 PM EDT
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I was recently married and I am now doing a budget with my Wife. I am trying to figure what are the general percentages that people use to figure this out? Right now we have a Mortgage: self explanatory Home bills: utilities, cable ect. Personal bills: cell phones, medications, supplemental life insurance, ect. Vehicle: gas, general repairs, insurance, ect. spending money: going out to eat, movies, buying personal things ect. grocery money: money for food and home staples ect. What do you all think? This is based on a combined take home of about $5,000.00 per month. We are currently left with about $1,000.00 for grocery money, spending money. Is that enough. (I realize that this may sound dumb, however I don't know if have enough give, or if we should look for a smaller less expensive home.) |
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These seem to be the most popular methods (taken from Wikipedia): The 60% Solution The 60% Solution is a budgeting system created by MSN contributor Richard Jenkins. The name "The 60% Solution" originates from Jenkins' suggestion on spending 60% of a household's net income (after taxes) on fixed expenses. Fixed expenses includes taxes, regular bills and living expenses- like food and clothing, car and house payments.[1] The other 40% breaks down as follows, with 10% allocated to each category: * Retirement: Money set aside into an IRA or 401(k). * Long-term savings: Money set aside for car purchases, major home fix-ups, or to pay down substantial debt loads. * Irregular expenses: Vacations, major repair bills, new appliances, etc. * Fun money: Money set aside for entertainment purposes. If an individual has a high amount of non-mortgage debt, Jenkins advises that the 20% apportioned to retirement and long-term savings be directed towards paying off debt; once the debt is paid off, the 20% (Retirement + Debt) is to be immediately redirected back into the original categories. According to Jenkins, tracking each individual expense is unnecessary, as the balance of his primary checking account is roughly equivalent to the amount of money that can be spent in this plan. Housing as 25% of spendable income Another allocation principle is that housing expenses (mortgage or rent) should be limited to 25% of spendable income. This rule of thumb especially applies to families moving to new housing; if a house payment for a $300,000 house, plus taxes, will result in a $2,000 monthly mortgage bill, will it take up too large a portion of the budget? In housing markets with exceptionally high prices, such as California or Boston, Massachusetts in the early 2000s, this rule of thumb may be difficult to follow. A high percentage of income spent on housing will necessitate lower percentages in other categories. |