Household Budget Ratio

The Economic Times conducted a survey that revealed overspending as the biggest money-related reason for fighting between couples. Creating a household budget is the best way to get everyone in the family on the same page, thus avoiding any possible conflict. When making a budget, you'll want to review the ratios for each category, such as housing and food, and then adjust them slightly to fit your situation.

Before you can allocate your income into categories, you need to know how much money you're bringing in each month. This is easy to do if you receive a salary or a weekly paycheck that doesn't deviate by much. Simply add up a month's worth of income, and you'll know the amount with which to budget.

If you are self-employed or your income varies, you'll need to come up with an average. You can use your last tax return and divide the yearly amount by 12 or add up three months' worth of the money you made and then divide that amount by three.

The first category in your budget should be housing. This ratio should be enough to pay your mortgage or rent payment, homeowners insurance, taxes, utilities and any repairs. Depending on where you live and the type of apartment you rent or home you own, you can expect to set aside 25 to 35 percent of your income for housing expenses.

Next, you'll need to set aside money for food. This budget ratio should also include money for shampoo, laundry detergent, toilet paper, deodorant and anything else you'd purchase when shopping at the grocery store. Again, the percentage depends on how many individuals you have in your home, but you can use between 5 and 15 percent as a good gauge.

Transportation budgets can be quite low if you live in the city and take advantage of public transportation. They can also be quite high if you have car payments, insurance, gas and registration costs to consider. Take a look at your situation and determine whether you'll need the lower 5 percent or the higher 15 percent for transportation costs.

If you don't get health care through your employer and don't qualify for the state's free insurance, you'll need to create a budget for your medical expenses. This ratio should include the monthly cost of your insurance premium as well as any copays and deductibles you need to meet. Between 5 and 10 percent is ideal for this category.

Every family needs to set aside money for savings. This is important for reaching short and long-term goals as well as retirement and paying for a child's college education. Between 10 and 15 percent is a good goal for this category.

Expenses that don't fit in any of the other categories can go in the miscellaneous section. For example, if you have debt that you need to repay, a charity to which you'd like to donate or day care expenses, you can use the miscellaneous section of your budget. Anywhere between 10 and 20 percent is a good goal for this category.