There is nothing scarier than looking at your money and trying to figure out what to do with it and where it goes. A budget is simply a spending plan that you have control over. However, many people do not feel like they have control over their spending plan.
Everyone has spending categories:
Food
Shelter
Clothing
Transportation
Utilities
Food can be categorized as groceries, snacks you eat during work, eating out for lunch/dinner, or any other meals you may consume. Food can also include what you spend on juice, milk, soda (even from the soda machine at work).
Shelter is your rent or mortgage. Whatever you pay in order to live somewhere is your shelter.
Clothing is what you spend to keep clothes on your back. This would also include shoes/sneakers, under garments, and socks, etc.
Transportation is what you spend on your car note, car insurance, gas for the car or your bus and train pass if you ride public transportation.
Utilities include water, heat, electricity, cable and the internet, etc.
Below are five basic categories for your spending plan (budget).
Recommended Spending Percentage
The recommended amounts to spend percentage wise is as follows:
Food: 15% of your net income
Shelter: 32% of your net income
Clothing: 5% of your net income
Transportation: 15% of your net income
Utilities: 5% of your net income
If your net income is $2,000 per month then you would spend:
$300 monthly on food
$640 monthly on shelter
$100 monthly on clothes
$300 monthly on transportation
$100 monthly on utilities
Total spent: $1,440
Total Left: $560
With this $560 you could:
- Put it towards debt (if you have any)
- Put it towards savings (emergency fund)
This would be a very simple budget to stick to as long as you are dedicated to tracking your money.
Most of us are not privileged to not have any debt. Most of us have some kind of credit card, car loan and/or student loan debt which takes a significant amount of our income. If this is you you may want to consider reducing some of your expenses and/or getting a second or part time job. If you are able to, you may want to share an apartment with a friend or family member. Even if you are able to find a two bedroom apartment for $1,100 a month, you would be saving $90 per month based upon the above scenario. You would also be able to split the utilities per month with another person which may help to reduce your expenses.
Obtaining a part time job is not out of the question today either. One of the go to part time jobs that people tend to gravitate towards is being an Uber or Lyft driver. Even if you did this enough to earn another $400 per month this may be worth it in order to cut down on your expenses and the amount of money that is coming out of your checking account.
If you would like some help with your budget feel free to contact me below.
I am also on Facebook as The Frugal Biddy.
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