There’s a reason why insurance is a quarter of your budget. If you’re self-employed, you might find yourself paying a hefty chunk, but don’t be dismayed. So while 25% sounds like a lot for insurance, this accounts for people with low premiums or low incomes. Health, disability, life, car – you know the drill. If you plan appropriately and dedicate enough to the next category, you shouldn’t find it too hard to stay within 10%. You never know when you’ll need to go to the pharmacy or the ER, especially if you have children. So it’s always safe to have some money set aside. At the same time, it may be hard to plan for health costs. No amount of money is worth a compromise on health. Not only does it have no recurring fuel cost, but it’s healthy too. On the other hand, if most of your day-to-day runarounds are short distances, consider investing in a bike. If you’re in a big city with alternative means of transport, it is good to use those and reduce commuting expenses. Also, all forms of public transportation costs, including taxi service, fall here. The section includes your car loan payment, car insurance, gasoline, and all the maintenance costs. However, if you prefer your current house, you can increase your housing allocation and reduce it in another section. When you find it hard to stay within 25%, perhaps it’s time to consider moving to a more affordable place. If you are on a mortgage, be mindful of the hidden costs that accrue quickly with home ownership. The housing percentage is for paying for either your rent or home mortgage and home/renters insurance. One of the most expensive costs these days is paying to have a roof over your head. Just be sure to stay within those guidelines and don’t go spending more than 5-10% Dave omits cellular plan payments and laundry in this category, but it is okay if you choose to for the sake of your budget. Utilities include your electricity, gas (for the stove or the heater), water and sanitation services. So, if you love dining out a lot, you may need to strike a balance to live within this percentage. However, the 10-15 percentage is attainable with proper planning and buying groceries in bulk.Ĭooking your food is much cheaper than dining out. Why? Because the daily or weekly food expenses add up so fast, especially if you have dependents and dine out frequently. Retirement savings also fall in this category. Additionally, we use extra savings to invest and build wealth. Secondly, you save for big and small purchases. You never know what could come up or when. First, an emergency fund is a necessary contingency these days. The course contrasts the retroactive one, where you just put away the balance after spending. Saving – 10%Ī positive approach to saving is stashing money away consistently every month for later uses. Even if you are already in debt, always give some amount to help the needy.ĭave is all about giving back, so it is only natural that his budget percentages account for that. Thoughtful charity is a great way to develop a healthy relationship with money. He recommends allocating 10% percent of your net (after-tax) income to your local church or needy community ventures. The first tenet of Dave Ramsey’s budgeting is charity. There are eleven (11) budget categories, and the percentages are below. Therefore, it is good to research and find one that suits you. There are many budgeting methods out there that aim at guiding you in money planning. Secondly, it guides you in arriving at your desired destination. First, it helps you recognize where you are currently financially. Moreover, you will not be ready for emergencies when life throws the unexpected your way.Ī budget is a financial roadmap. Failing to plan your money will result in debt accumulation since you will be borrowing to pay for infrequent expenses. He designed the Dave Ramsey budget percentages detailing many categories which can guide you in money planning.īudgeting is inevitable if you desire to realize your goals in life. Dave Ramsey is a financial guru and radio personality.
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