a guideline to setting up your budget…

This one is going to be long….I apologize ahead of time….

I’ve had several emails from friends asking for some sort of guideline to help them set up a new monthly budget..and with the New Year officially here, getting financial fit is on the top of  a lot of people’s priority list-at least for now! But only the elite will stand strong after a few months…..it’s kind of like when everyone heads to the store to purchase their new treadmill and then several months later you see a whole bunch of them for sale on Craig’s list….haha!!

Below is a general guideline to help you to break up your budget into 12 categories. Keep in mind, it’s JUST a general guideline but if you follow this, you’ll get yourself started on a financial fit 2013.

A few notes before we begin:
-round up to the nearest dollar when estimating your line items within the categories
-figure out what your yearly net income (your income AFTER taxes) is and then divide that by 12. That will give you your monthly income to base the recommended  % from.

The 12 Categories:

1. Housing: this category should add up to be no more than 38% of your net/spendable monthly pay. This category includes things such as:
-mortgage/rent payment
-property + school taxes
-home owners/renter insurance
-ALL utilities:

  • electric
  • gas
  • water
  • cell phone
  • land line phone
  • trash
  • sewage
  • internet
  • cable/satellite
  • maintenance/repair
  • etc, etc.

2. Food: this category should add up to be no more than 10-15% of your net/spendable monthly pay. This category includes things such as:
-groceries but NOT eating out-that’s for another category

3. Auto:  this category should add up to be no more than 10-15% of your net/spendable monthly pay. This category includes things such as:
-car payments
-auto insurance
-gas
-oil changes/regular maintenance
-depreciation allowances

4. Insurance: this category should add up to be no more than 5% of your net/spendable monthly pay. This category includes things such as:
-heath insurance

  • dental
  • medical
  • eye care

-life insurance
-disability

5. Debts: this category should add up to be no more than 5% of your net/spendable monthly pay. This category includes things such as:
-credit cards
-bank loans (not mortgage)
-student loans
-personal loans (from friends and family)

6. Entertainment: this category should add up to be no more than 5-7 % of your net/spendable monthly pay. This category includes things such as:
-this is a very broad category, it’s basically anything you do for fun or relaxation

  • vacation
  • club dues
  • movie tickets
  • music
  • computer games
  • restaurant meals
  • baby sitting costs
  • etc.

7. Clothing: this category should add up to be no more than 5-6% of your net/spendable monthly pay. This category includes things such as:
-work clothes
-casual clothes
-workout clothes
-school clothes
-shoes
-underwear/bras (I know, I know, but you got to account for them)
-seasonal clothing
-coats
-purses

8. Savings: this category should add up to be no more than 5% of your net/spendable monthly pay. This category includes things such as:
-save, save, save
-max out this category if you can *wink wink*

9. Medical Insurance Deductibles: this category should add up to be no more than 4-5% of your net/spendable monthly pay. This category includes things such as:
-these are the unpredictable and most insurances have you meant a deductible before picking up the rest of the tab..so plan for the unexpected!

10. Miscellaneous: this category should add up to be no more than 4-5% of your net/spendable pay. This category includes things such as:
-junk drawer of your budget, where you put things that won’t fit anywhere else

  • Christmas gifts
  • anniversary gifts
  • dry cleaning
  • hair cuts, mainicures
  • magazine subscriptions
  • etc, etc.

11. Investments: this category should add up to be no more than 8-13% of your net/spendable monthly pay. This category includes things such as:
-any money left over at the end of each month can be funneled into this category-when possible.

12: School/Childcare: this category should add up to be no more than 5-10% of your net/spendable monthly pay. This category includes things such as:
-college tuition
-private school tuition
-child care

So there you have it. I know it was LONGGGG, but it’s a guideline to get you started. If you’re over the recommended percentage in any of the categories..chances are that you need to make some adjustments because you can’t afford to continue going the route your going. Put on your sweat bands, hike up your yoga pants and get financial fit! Say it with me now, “I’m a Pony, I’m a Pony!!”  <insert Richard Simons music> tee he he!

 

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