Budgeting
A Budget Breakdown
Posted by Jean
More and more people are budgeting these days, and I’ve been getting lots of questions about where your money should be going each month – in other words, how much you should be spending on each area of your budget, from housing to entertainment to everything in between. The pie chart below – which we used on Oprah’s Debt Diet – outlines all the details:
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Jean,
Thank you so much for posting this pie chart. I would like to recommend that “gifts” could be added under living expenses as well, as this is an expense many families fail to plan for within their annual household budgets each year. Saving for future holidays, special occasions and charitable giving are often overlooked and can clearly be a “budget buster” especially when an unexpected gift giving occasion arises, e.g. baby shower, engagement party, wedding, fundraising event or memorial gift. Once the gift budget projection is established, it can be broken up equally by the month with the cash set aside in a separate gifting wallet. This stragegy allows consumers to shop the clearance racks all year long for great gift items that they can stash away for future gift giving occasions without the guilt of overspending or taking away from the household budget! I hope this comment is helpful to your readers!
Where in the pie chart would groceries fit in? The “Other Living Expenses” has “Eating out”, what about eating in? thank you.
Your Spending Plan Chart is a very helpful tool – thank you for this. I am happy to say that following your plan of paying down debt, increasing my savings and living within my means has adjusted my spending percentages well within the guidelines you have shared plus increased my savings percentage to 30% (which doesn’t include my monthly pension or index fund contributions (paid by employer)and I’ve reduced my living expenses to 17%. My financial life is so different compared to Spring 2007 that an analyst looking at my numbers would assume I am a different person yet I am living a better life all around.