The recommended budget for a typical American household is one that fits within their means and meets their personal financial priorities. While that answer can initially sound frustrating, it makes complete sense when you look at the issue in detail. There is no right or wrong with personal budgeting because it's just that—personal.
Experts recommend spending 30 to 35 percent of your take-home pay on combined household expenses, including rent or mortgage, utility bills and furnishings. However, housing expenses are lower in the Midwest when compared to New York City or the West Coast, for instance, so the percentage of your income allocated towards housing costs will vary somewhat based on where you live.
Americans generally spend 17 to 19 percent of their take-home pay on costs associated with transportation including car payments, maintenance, gasoline and insurance. This too varies with individual circumstances. Public transportation, an old car that needs frequent maintenance or an unusually high car payment can cause this percentage to be much higher or lower in your own budget.
American households spend 15 to 20 percent of their budget on food, including dining out. This has grown steadily over the past several decades. One report from North Dakota State University points out that spending for food was just 33 percent of household spending 50 years ago.
Other Budget Items
Other budget percentages also depend heavily on your lifestyle, spending priorities and location. Some households must budget for debt repayment because they have student loans and credit cards. What you consider a reasonable cost for entertainment may seem horribly expensive to someone else. In the end, your financial goals are what dictates the best budget categories and amounts for your household.
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