#Household budget percentages how to

When the debt’s gone, you need to save up a fully-funded emergency fund (Baby Step 3).

If you’ve got debt (which I’ll cover later) keep that emergency fund at $1,000 until you’re debt-free (which is Baby Step 2). (I call that a starter emergency fund, or Baby Step 1.) This puts a cash buffer between you and those life happens moments. Since budget percentages for these can vary, let’s talk through each one.Įmergencies: Set aside $1,000 in the bank right away. When it comes to the savings category of your budget, think about these three reasons to save: emergencies, big purchases and wealth building. How much you’re putting in savings each month depends on several things! 1 But this is a great example of how a percentage or even an average shouldn’t set a standard for you. If you’re wondering what’s typical here, the average American saves around 9% of their income.

#Household budget percentages how to

(Aka how to win with money.) The Baby Steps tie in with how much you should spend in a few of these budget categories-especially savings. This is the proven, guided path to save money, pay off debt, and build wealth. Heads up: I’m about to talk about the 7 Baby Steps. So, before we dive in, here’s an overview of the budget categories we’ll cover in this article:

Look up your own! Open your online bank account or get out those bank statements and see what your past spending reveals. Or maybe a category is like a playlist, and the lines are like songs.Īlso, if you’re reading this as you set up your first budget, don’t stop with the numbers I’m about to give you. If those words are new to you, think of a budget category as a folder, and the budget lines as files inside it. Let’s break down some national averages and budget percentage recommendations for common budget categories and budget lines. Guidelines for Setting Your Budget Percentages So, I’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? 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.īut there are a few standards to follow. 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.Īnd listen, I’m not about to give you a one-size-fits-all budget percentage guide.