Where can I find info on how much of my income should go to different expenses?

[sandrark]

What are considered needs? I certainly can not see how I can cover needs with half my salary. I am using 70% on needs, 11% savings, 19% to pay off debt.

When I get debt free it wont be much different:
60% needs, 20% savings 10% charity, 10% wants, most likely more savings since I am late with retirement planning

Radiance, the point of the 50/30/20 formula is straightforward...

If you ARE spending more than 50% of your income on needs, it will be hard to do the things you need to do...save for replacement cars, set aside enough for retirement or a house downpayment, pay for healthcare, house maintenance, etc.

It's a TARGET - Warren's thesis is that many people may not be at the 50% threshold when they start paying attention, but that's the balance you should be aiming for. So, once your debt is paid off, instead of upgrading your housing now that you have "breathing room", you should stay where you are, and reallocate the income to savings. When your income has increased enough that upgrading your lifestyle maintains that percentage....THEN you can upgrade, but not before.

Since your needs are at 70%, you either need to downgrade some of your expenses, or you need to focus on making more money.

It's also worth noting that Warren assigns debt repayment to the SAVINGS category, since you're increasing your net worth by paying it off.

Sandi

[Mike75]

Where does the money go? Statistical Averages published by
Canadian Gov't. Should not be too different from USA since our standard of living is similar. The major difference is health care [we don't pay premiums; cost recovery via gasoline tax & 4 % federal income tax], Canadians get no tax credit for mortgage interest & property tax]

Housing 30%
Auto 15%
Food 17%
Health & Life Insurance 5%
Entertainment 7%
Clothing 4%
Medical 6%
Debt Repayment 5%
Savings/Investment 5%
Misc. 6%

Easy to work out percentages of your net income and compare to your actual spending.

housing 30% This is not true for everyone and just 5% for health insurance is a little too low.

It should be 10% on insurance and 25% on housing.

[watsoninc]

I agree with the previous posts, and I think your allocations also vary based on your income and your financial plan. If you make the median income, then it's ok to look at population averages/medians for guidance. However, if you make 4 times that national median say $200K, then your numbers may be quite different. Do you really need to spend 30% of your income annually on housing ($60,000/year)? Also, if your financial plan is to become debt free quickly, your numbers will vary too. You may not want to go near the recommended 30-33% for housing. After you become mortgage free, your housing costs will likely be substantially less too. Same with transportation costs if you don't have a car note.

[Slug]

I finally found the website that does this again.

Bundle: The No. 1 Source for How People Spend and Save Money -- Personal Finance Data, Money Advice, Trends, News and Community

[MoneySaver2]

Budgeting Software

Someone posted on another forum that the IRS site has this info but I never found it. I'm looking for something that will tell me what percentages are typically spent on food/clothes/etc..

Not sure if anybody has suggested this but if you go to mint. com they are a free service that will help you with all your budgeting needs. I use them myself and it is very automated. I believe they show what the national averages are as far as spending categories. There is some debate on how secure it is since you give them your financial log in username and passwords but like i said that is up for debate.

On a side note don't forget to look at auto insurance. Most people tend to forget about budgeting their auto insurance. If you shop it around usually you can save a couple hundred dollars. A good site that I have seen for that is frogdogquotes .com. It's definatley a different name but they have a lot of useful tips and how to save money on insurance and they will provide quotes for you.

Hope it helps!

[karenkc]

I finally found the website that does this again.

The No. 1 Source for How People Spend and Save Money -- Personal Finance Data, Money Advice, Trends, News and Community[/url]

Interesting site. thanks.

[karenkc]

Not sure if anybody has suggested this but if you go to mint. com they are a free service that will help you with all your budgeting needs. I use them myself and it is very automated. I believe they show what the national averages are as far as spending categories. There is some debate on how secure it is since you give them your financial log in username and passwords but like i said that is up for debate.

On a side note don't forget to look at auto insurance. Most people tend to forget about budgeting their auto insurance. If you shop it around usually you can save a couple hundred dollars. A good site that I have seen for that is frogdogquotes .com. It's definatley a different name but they have a lot of useful tips and how to save money on insurance and they will provide quotes for you.

Hope it helps!

Thanks for the suggestion. I chose not to use mint.com because your bank won't help recover money if the mint account is accessed fraudulently since the consumer provided mint with all the banking information. I may be extreme though because I also stopped using PayPal for the same reason. If the account is used fraudulently only PayPal can help recover the money. I read so many stories of people having their paypal account used fraudulently and then having the paypal customer service rep tell the customer they must have given out their password and not attempting any help in recovering the money. I find this completely believable after my experience with their cs in other matters. I digressed but your post reminded me of that and I'd like to warn people.