There are SO many different schools of thought on what percentage of your money should be put where for the perfect financial profile. I personally try to save as much as I can, but when I first started getting my budget together, these are the numbers I tried to follow.
I had my company take 10% of my paycheck before it even reached me (so pre-tax) to put towards my IRA (retirement) and FSA (pre-tax medical fund) accounts.
Then with my take home pay, I tried to follow this model.
| 28% | Mortgage/Rent |
| 22% | Mandatory Expenses such as utilities, internet, tuition, groceries and gas |
| 15% | Optional/Fun Expenses such as Netflix, swim lessons, gym membership, eating out, clothes, entertainment etc… |
| 5% | Retirement Account (I have a Roth IRA in addition to my traditional IRA) |
| 30% | Savings or Debt Payoff |
| 100% | TOTAL |
When I first started, I wasn’t really able to follow these numbers exactly because I didn’t quite have a grip on my spending habits yet, but as I started budgeting more and more I have gotten better at sticking to this plan.
In fact, at one point (pre buying a house and having kids) I was able to work actually meet my goal of paying of all my debt, putting the whole 30% towards savings, and about 6% toward retirement.
Now, having bought a house, new car and doing a kitchen remodel last year, my priorities have switched to paying off debt. But, that’s the best part about budgeting. You know exactly where your money is going, and you can decide where you want it to go to meet your personal financial goals.
If you don’t have a budget yet, go over and get one of my FREE budgeting worksheets here or start with my budgeting overview. I hope this numbers breakdown gives you an idea of how to start your plan.