Setting up a budget is not just about tracking your food and rent expenses. You should also include debt payments to credit card companies or a payday lender. For the most part, there are ten basic categories you should track to make sure you cover all your expenses when creating a budget.
By far, the biggest category is your rent or mortgage payments. The average family might spend 24 percent of their income on rent, but mortgages might go as high as 28 percent or more of the gross income. The key is to have more money left over for the rest of your budget.
Utilities, Food, Clothing, Transportation
Personal costs like utilities, food, transportation, and clothing have to be factored into a budget. If you have trouble figuring out what these amount to, save your receipts and bills to get an accurate picture.
This can be costs associated with health insurance or to keep up your health. You may have certain prescriptions that you have to fill out weekly, monthly, or annually.
Always add a bit for entertainment so you don’t feel deprived. It can range from 5 to 10 percent of your budget, depending on how much disposable income you have to spend.
You will have to service debt that can be anything from car payments to credit card payments. Try to keep your total debt load to only 15 percent or less of your total budget. If it gets too high, it can signal you to tighten your belt.
Don’t forget what you give away should be budgeted as well. Some people like to tithe their income at 10 percent of their gross take home pay, but there is no set formula. You decide what you can afford to give and then just count it as another item in your budget so that you don’t end up giving up too much and later regretting it. and then just count it as another item in your budget so that you don’t end up giving up too much and later regretting it.