Guidelines for How to Budget Family Income Percentages

Percentage guidelines help with money management.
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Developing percentage guidelines for your family income is vital to a family budget. This allows you to spend what is needed without going over the allotted amount that you have set for each category of expenses. After you have listed your income and variable and fixed expenses, make sure that the expenses do not exceed the percentage you have set for that category. Some professionals suggest limiting the necessities to 60 percent of your income.

Rent or Mortgage

You should expect to spend between 25 to 30 percent of your net income each month on rent or mortgage. Landlords and property managers typically require you to make at least 2.5 to three times the rent to qualify as a tenant. If your current home takes more than 30 percent of your income, it is time to add to your income, get a roommate or find a cheaper place to live.

Personal and Grocery Items

Allot between 12 and 25 percent of your income to personal items and activities as well as groceries. This includes entertainment and beauty services such as hair salons and barber shops. Two to 10 percent can be expected for personal expenses while the remaining 10 to 15 percent can be spent on food. If you spend more than these percentages, it would be best to cut back on dining out and other entertainment activities and focus more on the necessities such as groceries.

Utility Costs

Utilities include electricity, telephone service and gas and should cost you no more than two to 10 percent if not already included in your rent. If you are looking for a place to move, you can contact the property manager to see if they have a set price for all tenants and what the average cost of the area is.

Transportation and Insurance

The cost of transportation includes the amount of money it costs to ride a train, to put gas in your car or even to fly out of town. This also includes maintenance costs such as oil changes and can be estimated by multiplying the mileage you drive by 30 cents. You should spend no more than two to five percent on transportation.

Two to five percent should also be on insurance, which includes health insurance, car insurance, life insurance and homeowner’s or renter’s insurance. These premiums are not paid on a monthly basis.

Debt, Savings and Miscellaneous

Debt should not take more than 15 percent of your monthly income and should include credit card payments, student loans and other sources of debt. Save between five and 10 percent of your income each month and set aside between one and two percent of your income for unexpected expenses each month.

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