Budgeting Basics – How to Build Your Budget

Ever find yourself living paycheck to paycheck? Find that you are spending more than you are making and having trouble making ends meet? You are not alone. Thankfully, here are some suggestions that will help you get back on track. The following graph is a suggested percentage breakdown of your monthly expenses. By sticking to these guidelines, it will help you live in a budget. Even if you do not have as much money as you’d like (and no one does), you can make more out of what you have by using these simple guidelines: Food includes groceries, eating out at restaurants, and alcohol. Food should be about 14.1% of your monthly income. Transportation should be about 19.1% of your monthly budget and includes a car payment, expenses related to a car, such as gasoline and oil changes, as well as other forms of transportation such as taxis, subways, and buses. Hosing, about 32.9% of your monthly budget, includes the cost of rent or mortgage plus utilities such as electricity, water, and cable. Insurance and healthcare should be about 15.8% of monthly budged expenses and consists of insurance premiums for health, life, disability, and long term care insurance. This category also includes pensions. Entertainment, about 6.0% of your monthly budget, expenses include: books, music, magazines, movies, shows, sporting events, and gifts. Personal care includes clothes, shoes, cosmetics, dry cleaning, and laundry related expenses and should be about 5.3% of your monthly income. Last, but certainly, not least, savings and miscellaneous is whatever money is leftover, but hopefully about 6.8%, includes expenses towards debt reduction, loan payments, investments, and charitable contributions. Remember these percentages are merely suggestions. You might spend more in one area, but less in another. By budgeting based on these guidelines, you will find that you are living more within your means, and will be well on your way to financial freedom in no time!