A budget is an often misconstrued idea. Most people think of budget as a bad word and they think it means they need to get everything as cheap as possible.
A budget should really be a plan of how you’re going to allocate the money you have.
My parents love to tell the story of they day they realized I had mastered the concept. I was about 7 years old and we were Christmas shopping. My dad and I went to Cost Plus and he gave me $20 to buy presents for the family. That meant I had to shop for my mom, dad, brother and sister. I instantly knew that this meant I needed to look for items that were $5 or less for each of them.
In adult life, it isn’t quite so simple but the same principle applies. You have a certain amount of money and you have certain things you need and want to do with that money (spend, save, invest). All you need to do is make sure that all those needs and total the amount you have and not more.
I know I love to see numbers so here’s a percentage breakdown of how I spend, save, and invest my money (after taxes):
Retirement 14%
Rent 27%
Auto (insurance, fuel, maintenance etc) 8%
Food (groceries and eating out) 6%
Travel 5%
Entertainment 5%
Shopping 5%
Utilities 4%
Medical (copays, prescriptions, etc) 2%
Savings (emergency, future cars, etc) 24%
Related posts:
October Budget Wrap Up
December Budget Wrap Up
July Budget Wrap Up
August Budget Wrap Up
September Budget Wrap Up
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