With all the talk about recession and stimulus packages, I thought I’d look up what’s recommended spending by professional money managers. If we all stick to something like this, we won’t have to worry about losing house, cars, etc.
- 35% of income should go to housing (mortgage, taxes, repairs, improvements, insurance & utilities)
- 20% transportation (payments, gas, insurance)
- 20% other expenses (food, insurance, medical, entertainment, clothing)
- 10% savings (stocks, bonds, cash)
- 20% other (debts, loans) Of course, if this percentage is lower for you, it can be added into mortgage or savings.
Wow, this is great advice. We all should live by these rules. Thanks so much for your sweet comments regarding my little one and the stomach flu. I had no idea there were over the counter drugs to help with the symptoms. Thanks!
Michelles last blog post..We’ve Been Invaded. Sorry To My Top Commenters and Entrecard Droppers
Sure; hope it helps! I didn’t know either, until the first time when dd and I got it. My cousin is a herbalist (had his own shop) and got us the stuff.
Interesting…did you notice it adds up to 105%? I think that’s been our problem all along–people spend more than 100% of their income–probably most spend a lot more than 105% of their income. And this advice came from a money manager!
Really–I’m sure it was a simple math error, and if people would limit themselves to what they can afford–and especially save 10% as this person suggested–our country would not be in this fix.
If I were giving the advice, I’d eliminate debt and loans (except for a mortgage) and add a percentage for giving to others instead. Never borrow more on your credit card than you can afford to repay at the end of the month has been my motto. It has always worked well for us–as it did for my parents.
I don’t even go outside anymore. Seems every time I do, I lose a little more money somehow.
I need to redo my budget…
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Yeah, you and me both. I have a tendency to like to buy stuff. My stuff is usually food or kids stuff.
Judging by all the grim news reports, I have a feeling family spending looks more like this:
* 75% of income go to housing (mortgage, taxes, repairs, improvements, insurance & utilities)
* 25% transportation (payments, gas, insurance)
* 25% other expenses (food, insurance, medical, entertainment, clothing)
* 0% savings (stocks, bonds, cash)
* 25% other (debts, loans)
* 50% borrowed on credit cards to supplement income and pay on the others.
And all this unwise living above our means equals: BANKRUPTCY.
Davida
Ouch! We’re good for the housing part…but the other and debt could be lower.
The last comment is totally true. I talked to someone today who lives on $194 a month from public aid to pay for her groceries and whatever else she has goes to pay for rent and gas to get to her new part time job. Her husband lost his job and their house they are renting is being foreclosed on so they have no savings or rent to own money they were paying the landlord. Unfortunately more and more stories are popping up like this which just saddens me. What do these people do when there is nothing going for them. Thanks for the tips, thank goodness my does the budgeting and lives and breathes by saving money and not overspending.
Heather @ Mortgage Modification
I just wanted to drop you a line and tell you that I really liked this post. It was full of fresh information and creativity, both of which we always need.