Understanding the percentage breakdown of your budget is critical to understanding how to save money and spend responsibly.
In the United States, both family and nonfamily households saw an increase of 7.3 percent and 6.2 percent respectively in 2018 for their median incomes. An increase in income means tackling a new budget plan.
For the best hack for calculating budget percentages and other stats, check out this impressive list of five lesser-known budgeting math hacks.
Read on to learn more.
1. Use Basic Budget Percentages
Budgeting math can be very intimidating. Use basic budget percentages to curb the challenge. First, consider the expenses you spend in your daily life. It may be things such as:
Don’t forget to create categories for personal and saving expenses as well. Dedicate specific percentages for each fixed costs you have.
Basic budget percentages may look like using 10 percent of your budget for food, 10 percent for insurance, 25 percent for housing, 5 percent for clothing, 5 percent for entertainment, 5 percent for utilities, and 10 percent for transportation.
For easy ratio calculator use, check out more here.
2. Consider your Net Income
To know how much money you have to spend, first, consider your net income. Consider what your income is without taxes. The more specific you can be, the better. Breakdown your income on either a biweekly or monthly basis.
Incomes fluctuate, don’t forget to denote any changes as they occur.
3. Separate Essential and Non-Essential Spending
Remember to separate essential and non-essential spending. Essential spending is typically fixed costs. These expenses are ones that usually stay the same each month. They may be costs such as:
Next, create a budget for non-essential spending. These costs often differ on a weekly, monthly, and annual basis. This may be expenses from dining out or larger, one-time purchases such as furniture or travel.
4. Try the 50/30/20 Rule
Another excellent approach to spending percentages is the 50/30/20 rule. This is a more broad approach to budgeting. It suggests fifty percent of your budget goes towards essential living expenses, thirty percent towards non-essential, and twenty percent to savings.
5. Review Your Budget Bi-Weekly
Don’t forget to review your budget plan bi-weekly. Budgeting is an evolving science and it’s normal to see changes in expenses. Remember to be adaptable and stay on top of any changes.
By staying on top of your budgeting goals, you set the best chance of realizing them. You’ve got this!
Hacks for Calculating Budget Percentages and Other Stats
Know all the hacks for calculating budget percentages and other stats to create a killer budget plan this year. If you’re just starting, don’t be afraid to consult with trusted friends and family to get started.
What are you waiting for? Your new budget plan awaits!
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