General Percentages For Creating A Realistic Household Budget

When creating a household budget it is a wise decision to take note of the percentages cited by experts in the budgeting field. If you know what your allowed percentage of expenditure on clothing or food is, it becomes easier not to go over your budget when you are shopping. Financial budgeting experts have calculated percentage amounts to use with a family budget. These percentages may or may not suit you; there is no need to feel they must be used, but they will give you a general idea of what to allow yourself for various expenditures.

Some financial budgeting experts believe that 20 percent of your income should be the absolute limit to be paying off credit card debt. If you can only pay the minimum amount off on a card, you'll end up in trouble. Try and do without a credit card. With a credit card, you have to pay for your past while still trying to afford your present. Many items bought with a credit card are luxuries that we can do without. If you are paying for groceries with a card you are adding to the total cost due to the interest rate - unless you can pay it all back within the month.

Back to percentages. Even if you know down to the last red cent how much you have to pay each month on housing or car payments, do you know what percentage of your income these payments constitute? Even if you do know, on what are you basing your figures - your gross income or net income? If you base it on your gross, you will get a figure that doesn't reflect reality. You should use only your net income, or take-home pay amount.

A manageable household budget is one in which your rent and mortgages (including tax and insurance) will be about 27 percent of your take-home pay, or net income. It need not be exactly 27 percent. The range can fall between 20 and 35 percent and still be manageable.

Transportation cost, which includes, gas, insurances and maintenance should be about 8 percent, while food should be in the 15 to 30 percent range. Utilities should be around 7 percent; clothing can range from 4 to 10 percent while personal care comes in at around 2 to 4 percent.

Health care depends on the individual and can range from 2 to 8 percent. Some people are really healthy, while others need prescriptions, dental work, eye care and other things. Insurances like life, disability and health can go up to 6 percent. Miscellaneous, which includes entertainment, childcare, travel and gifts can be anything up to 4 percent.

Having percentages such as these will give you a base line from which to work out your household budget and will help you to keep it on track.

  Use our household budget calculator to track and analyse your expenditures.