Today I’m going to share our personal budget percentages and categories we track. Remember, budgeting is an exercise in prioritization. Therefore, different people will have different allocations based on their own priorities.
Your budget won’t look like our budget. And that’s okay!
That said, it can be useful (or at least interesting) to see what categories other people track and how they allocate their spending by category.
Budgeting is just managing your cash flow.
You have money that comes in, and money that goes out. Sometimes more money goes out than comes in – and that can cause all sorts of problems.
Yes, budgeting is about tracking your spending. But more importantly it is deciding in advance how you are going to spend your money. Additionally, it’s about deciding to exercise constraint or make adjustments as needed to stay within the boundaries you set.
Troublesome unexpected expenses
Did you know…
About 1/2 of American’s would have a hard time covering an unexpected $400 expense. Almost 80% could not cover an unexpected $1,000 expense without going into debt.
What does that have to do with budgeting? The key word to catch there was “unexpected”.
Once you get good at budgeting, and it does take some time, you’ll find that you have fewer and fewer “unexpected” expenses. Unexpected expenses will be true emergencies – not forgetting to plan for someone’s birthday. (My birthday is in April if you want to budget a gift for me.)
Budgeting is the foundation of a solid financial fitness plan
Our personal budget categories
Before we talk about our personal budget percentages, let’s talk about the categories.
For someone just getting started with budgeting I highly recommend keeping things simple! Consequently, the fewer categories you track, the easier it is.
One reason people often don’t start to budget, or they stop budgeting after a period of time, is excess complexity. It doesn’t need to be complicated. Really. Budgeting should be simple. Perhaps not always easy, but certainly the process should be simple. Especially for someone just getting started.
Our categories are detailed, but we’re not normal
Karla and I have been budgeting since 2003 so we’re well beyond the “getting started” phase. Over time we reached points where we wanted a deeper understanding of certain category spending.
So “Entertainment” became “Entertainment: Books”, “Entertainment: Movies”, and “Entertainment: Music”.
“Utilities” at some point was broken out to reflect “water”, “gas and electric”, and “phone/internet/cable”.
“Grocery” is a common category for most people that catches everything purchased at a grocery store. We decided to split out “food” from “household” though. It’s a hassle going through to split up receipts, but it works for us.
Most people, especially beginners, will be better served to use fewer categories – perhaps like Dave Ramsey suggests.
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Our personal profile
To help make sense of our personal budget percentages, some context would be useful.
These categories and percentages are for:
- Married couple, 40s
- One child, in college
- Child swims competitively on the national level
- Travel and family time are priorities
- Healthy eating and fitness are also priorities
A quick tithing note
We’re Christians and always tithe 10% of all income to our local church. But you may notice that we have a Tithe category that is allocated 0%. The reason is that we are early-retired with minimal income right now. We mainly live off money we’ve saved and invested (which we tithed on as we earned). When we do have additional income we immediately write a check for 10% to the church. With minimal and variable income, putting anything in there would make the numbers look “odd”, so we leave it blank but handle it outside of the budget.
A quick note on retirement
“Early-retired and you still budget??” Heck yeah! Budgeting is just as important in retirement as when you are planning for retirement. Without managing your cash flow your odds of running out of money prematurely skyrocket! Budgeting should be a life-long habit for good financial fitness.
OK, the personal budget percentages are…
[By the way, if you aren’t budgeting because it seems too complex, you should check out the 50/20/30 rule of budgeting. It’s one of the easiest, most flexible budgeting options available.]
Thanks for being patient with me. I thought the above was useful – hopefully you agree.
Here are our spending categories and how we have allocated percentages of our annual spending.
|Allocated %||Budget Category|
|2.2%||Allowance (college spending)|
|1.1%||Dues (Facilities Membership)|
|1.2%||Hair & Nails|
|0.2%||Home Repair & Maint.:AC|
|0.3%||Home Repair & Maint.:Pest Control|
|0.3%||Home Repair & Maint.:Yard|
|0.1%||Other Home Repair & Maint.|
|1.6%||RV: Taxes (Property)|
|2.8%||Utilities:Gas & Electric|
|4.0%||Utilities:Phone, Internet, Cable|
|8.5%||Vacation & Travel|
Thoughts on those personal budget percentages
That’s the reality of our spending. We track every single dollar and it goes into one of those categories.
Our swimming category is the cost of attending college swim meets. Looks like a lot of money doesn’t it? Well, it feels like a lot to us too! But when you need to travel to remote states – for week-long swim meets like SEC Championships, NCAA Championships, and Olympic Trials (every four years) – it’s expensive!
Vacation is of course vacation but we also include the cost of going to college a few times per semester to visit with our daughter. (Yes, I told you family time was a priority.)
Other Medical includes deductibles, any medicines, things not covered by insurance (dental and vision for us), etc. Note: We’re actually a good bit under here and will likely adjust it downward next year.
Gifts (others) covers non-deductible “donations”. Family gifts are budgeted, but if we help out a friend in need, that falls under Gifts (others).
I think the rest is fairly self-explanatory.
What do you think?
Do you have any questions about our budget? Why we have the categories we do? Why we allocate what we do? Or where a certain expense might fall? Just ask in the comments below.
If you budget, are any of these categories drastically different from your own? It’s okay – we’re in a judgement-free zone. Like I said, budgeting reflects priorities and everyone’s priorities will vary. There is no right or wrong as long as all the numbers line up when all is said and done.