One of the most difficult things to do when setting up a family budget for the first time is to try and figure out how much you should spend in each category. The whole purpose of a budget is to set you straight on your spending habits and bring them back into line, right? So there’s a couple of ways to go about getting your spending back in line:
1. Find Average spending percentages nationally, or
2. Track your spending and create percentages off what you already spend.
The Big Factors
The amount of money depends a lot on living factors like, where in the country you live, if you have small children, if your battling a medical condition, etc. Are you a married couple with no kids? Then you’ll probably spend more on clothing and entertainment than a single mom with 3 kids. Studies have shown that lower income families spend a lot more money on food as a percentage of their overall budget that higher income families. We know that:
- Spending varies by income level
- Costs depend on family size
- Costs also depend on location
So every family and individual is different. There is no perfect combination.
The Category Average Percentages
|Category||Percent of Overall Spending|
|Housing (mortgage/rent, Real estate taxes)||24%|
|Utilities (water, power, garbage collection,||8%|
|Donations/Gifts to Charity||4%|
|Savings and Insurance||9%|
|Entertainment and Recreation||5%|
|Transportation (car payments, gas, service)||14%|
So that’s the average, based on statistics gathered from the US Bureau of Labor Statistics Consumer Expenditure Survey. Since this is based on what people actually spend and it varies so much by family, location, I wouldn’t recommend relying on it heavily in forming your family budget categories. So you ask, what should you be spending in each category to give yourself an edge in getting out of debt? Here are some percentage guidelines from Dave Ramsey, financial guru:
|Category||Percentage of Overall Spending|
How to Get it Right
While no budget is the same, it’s important to start somewhere. Start with these guidelines (and that’s all they are) and tweak it to fit your needs. But above all else you must spend ONLy what you bring in, so don’t tweak it too much that you find yourself overspending again. This is where I started and I found that I was able to bring our family food budget down significantly. So I’m sure it’ll help in many areas of your budget as you find you can live on less.
There are a few products that I recommend that will help you form a budget and stick to it. There’s nothing that brings more clarity to your finances that being able to see the big picture in one place and to be able to see what’s going on in each category of your budget. Mvelopes is one of them. It’ll help you set up your budget and give you easy control over it.
Also take a look at our free sample family budget template. It’s gives you a place to lay out all your income and expenses to be able to see where your money is going.