Gut Check Budget Recommended Spending

Spending generally falls within six categories in a typical budget.

We recommends that each category take up a certain percentage of monthly income, as outlined below: 

• Life: 18% 

• Debt: 12% 

• Home: 40% 

• Other: 5% 

• Savings: 10% 

• Travel: 15% 

Let’s review a sampling of some of the items that are included within each category.

 LIFE 18%:

 The items within the Life category include common living expenses, including clothing, childcare, groceries, computer downloads, subscriptions, and entertainment items such as monthly cable payments. All health care (Health and Life Insurance) related expenses are also included in this section.

 DEBT 12%:

 The Debt category is self-explanatory. Please note, however, that in addition to your credit cards, gas and store cards, as well as any other loans, there are some items that you may not readily identify as debt that should also be listed in this category. For instance, obligations such as child support and alimony should be listed here. (If such payments are directly deducted from your paycheck, omit them.)

HOME 40%:

 All expenses incurred in the maintenance of your home or apartment will be included in the home section. Common expenses can include rent or mortgage payments, any insurance associated with housing, household utilities, payments for household furnishings, as well as you're cleaning and maintenance products. Homeowners will also want to include any payments for water, sewage, and garbage removal.

OTHER 5%:

The Other section is essentially a catch-all area of the Spending Plan, and will contain a variety of your everyday expenses, including personal care products, birthday gifts, school tuition fees, Internet service, cell phones, the costs of your hobbies, and just about anything else that does not fit into the other categories of this plan.

SAVING 10% : 

Although you may not be saving money now, we recommend that people commit 10% of their earnings toward savings. 

Achieving this goal may take some time before it comfortably fits into your budget, but it is important that you strive to commit at least some portion of your earnings to this category. Even if it’s just one percent, it’s a start.

TRAVEL 15% : 

In the Travel category, list your personal and public transportation expenses. Remember to include any auto insurance, vehicle payments, parking fees, bus passes, car or motorcycle registrations, maintenance, and repair costs, as well as expenses for fuel.

At the conclusion of this step, many people discover that their spending doesn’t match our recommendations. 

That’s fine!

Remember, the point was to know where you are, so a plan can be developed to get you where you want to go. 

One of the goals of this analysis is to reveal those spending categories that need adjustment. 

Even before you finished making your entries, you probably identified several expenses you can cut back on. 

The next objective will be to use this information to create a revised, comprehensive budget, based on actual expenses. 

No ballpark figures allowed!