January 11th, 2009 11:21 PM by Salim (Sam) Kader MLO# 130505
Most people can tell you pretty much to the penny how much their mortgage or rent is every month. They can tell you how much they pay each month for their car loan. However, they have no clue what percentage of their income should be allocated towards housing or transportation. Many simply don't know.
Budgeting using percentages help you increase savings, repay and reduce debt, prevent impulse spending, distinguish between a need and a want and identify expenses that can be reduced.
Following is a sample guidelines of budget allocations (including comfortable or affordable ranges):
Keep in mind these percentages and line items are just guidelines. They help you establish a barometer. The range and categories will depend on a lot of factors, whether you're married, have children or live in a high-cost area. If 60 percent of your income is spent on housing, transportation and food, you've got to make the remaining 40 percent work by refiguring the percentages.
Everyone is different, and each one of us have a percentage for each item.
If you end up with credit card debts: