Every Household Should Have a Budget - Step 2. In the Getting Started blog, you were tasked with tracking all of your expenses for a month. Now that you have started pulling the information together you know when, where and how much you are spending. Was it a surprise? For most it is.
Now that you have an overview of what you are currently spending on a monthly basis, it is time to make some tough decisions and change some habits. Here are a few rules that will help get you on track:
- Rule #1.....DO NOT SPEND MORE THAN YOU EARN!
- Rule #2 .... PUT THE CREDIT CARDS AWAY
- Rule #3....SAVING IS NOT AN OPTION
- Rule #4.... Follow these guidelines to determine what you should spend
- Your housing expenses should be no more than 30% of your income
- Your savings should be 10% of your income
- Your utilities should be 3-4% of your income
- Your food 15-20% of your income
- Medical 5%
- Clothing 2-4%
- Transportation 5-20%
- Debt payments 15-20%
- Miscellaneous 5-10%
Now keep in mind the more you spend in one category will limit the amount you can spend in another.
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The opinions and general information in this blog are soley those of Kathy Sheehan. Specifics regarding an individual case should be discussed in detail with a loan professional. For a confidential consultation, please feel free to contact me via phone or email. All terms and conditions are subject to change.