Are you struggling to make ends meet? Are you having a hard time writing and/or sticking to a monthly budget? Do you feel like you have shaved your budget down to needs only but things still aren't adding up?
Let's explore some of the most common, yet overlooked budget busters.
1. Housing. This is an obvious need in your budget, but what percentage of your monthly take home pay are you spending on housing? Anything over 30% is not a need, that's just extravagant. Keeping it closer to 25% (or lower if possible) is ideal, especially if you're paying off debt. This may not be possible if your income is very low, in which case you may need to sell some things, get a second job, get a roommate to share expenses and/or visit your local food pantry to at least ease the burden of food costs. Anything you can do to spend less and make more money.
2. Car Payments. A car is also a need, but is your monthly car payment $200? $300? $400? $500? $600+? The average payment is around $500. That's a significant chunk of change! You should only be spending 10% (15% tops) of your monthly take home pay on transportation, and that does not include a monthly payment. That is for things like gas, maintenance and insurance. If you have a car payment and are struggling financially, ask yourself the following questions. Can you sell the car to get rid of the monthly payments and buy a cheaper car in full until you can save up enough to buy a nicer one in full to avoid having a monthly payment? Or at least trade it in for something with a smaller payment? Is there any way you can rely solely on public transportation and/or giving a little gas money here and there to friends and family to get around for a while? Not saying it's easy, but if these sacrifices could help you save up for a little while to help your finances, it will be far better in the long run! And please, whatever you do, don't buy a new car!! That is the most horrible investment I can think of.
3. Food. Another obvious necessity, but over spending in this category can easily slip past our radar because we tend to spend a little here and a little there, and that adds up! No more than 10-15% of your monthly take home pay should be spent on food. And if you have debt and are struggling financially, you shouldn't even see the inside of a restaurant unless you work there (as Dave Ramsey would say)!
4. Clothing. Yet another need in our budget, but we should only be spending an absolute max of 5% of our monthly take home pay on clothing. Honestly though, who needs to buy new clothes on a monthly basis? Unless you have children who are growing rapidly, or your entire wardrobe is stained, torn or just doesn't fit, make it last! Be content with what you have, especially if you're in debt and struggling financially! And if you do need to buy clothing, just a friendly reminder that there are other options besides expensive department stores. Clothing is also a tricky spending category, because once again, a seemingly small, indulgent purchase here and there adds up!
For those of you that may still feel skeptical or restricted by these suggested percentages or about budgeting in general, allow me to remind you that all we are doing is telling our money where to go instead of wondering where it went. We are exercising self-control so we don't feel out of control, living from paycheck to paycheck like a slave to money.
Imagine the possibilities of what you could do with the extra money if you didn't have a car payment, or if you didn't overindulge in clothing (or anything else for that matter). Or what if you had extra money every month because you lived in a home or rented a place you can actually afford?
Don't be fooled into thinking it's ok to over spend on needs. If you have trouble figuring out where to draw the line, let the suggested percentages be your guide. It will give you peace, I promise!
I gave up on indulgence years ago; I don't get my hair and nails done, I only own a small amount of inexpensive clothing, I don't have the latest (or much at all) in technology and I drive a modest car. The best part? I don't give a rat's rear what anyone thinks about it! I'm debt free, I travel a lot, my emergency fund is fully funded, and I'm living my best life!
And hey, if you can truly afford to have it all, more power to ya! And if you can't afford it but choose to have it all anyway, I won't be mad at you, but I will roll my eyes if you complain to me about your money problems 🙂
Let's explore some of the most common, yet overlooked budget busters.
1. Housing. This is an obvious need in your budget, but what percentage of your monthly take home pay are you spending on housing? Anything over 30% is not a need, that's just extravagant. Keeping it closer to 25% (or lower if possible) is ideal, especially if you're paying off debt. This may not be possible if your income is very low, in which case you may need to sell some things, get a second job, get a roommate to share expenses and/or visit your local food pantry to at least ease the burden of food costs. Anything you can do to spend less and make more money.
2. Car Payments. A car is also a need, but is your monthly car payment $200? $300? $400? $500? $600+? The average payment is around $500. That's a significant chunk of change! You should only be spending 10% (15% tops) of your monthly take home pay on transportation, and that does not include a monthly payment. That is for things like gas, maintenance and insurance. If you have a car payment and are struggling financially, ask yourself the following questions. Can you sell the car to get rid of the monthly payments and buy a cheaper car in full until you can save up enough to buy a nicer one in full to avoid having a monthly payment? Or at least trade it in for something with a smaller payment? Is there any way you can rely solely on public transportation and/or giving a little gas money here and there to friends and family to get around for a while? Not saying it's easy, but if these sacrifices could help you save up for a little while to help your finances, it will be far better in the long run! And please, whatever you do, don't buy a new car!! That is the most horrible investment I can think of.
3. Food. Another obvious necessity, but over spending in this category can easily slip past our radar because we tend to spend a little here and a little there, and that adds up! No more than 10-15% of your monthly take home pay should be spent on food. And if you have debt and are struggling financially, you shouldn't even see the inside of a restaurant unless you work there (as Dave Ramsey would say)!
4. Clothing. Yet another need in our budget, but we should only be spending an absolute max of 5% of our monthly take home pay on clothing. Honestly though, who needs to buy new clothes on a monthly basis? Unless you have children who are growing rapidly, or your entire wardrobe is stained, torn or just doesn't fit, make it last! Be content with what you have, especially if you're in debt and struggling financially! And if you do need to buy clothing, just a friendly reminder that there are other options besides expensive department stores. Clothing is also a tricky spending category, because once again, a seemingly small, indulgent purchase here and there adds up!
For those of you that may still feel skeptical or restricted by these suggested percentages or about budgeting in general, allow me to remind you that all we are doing is telling our money where to go instead of wondering where it went. We are exercising self-control so we don't feel out of control, living from paycheck to paycheck like a slave to money.
Imagine the possibilities of what you could do with the extra money if you didn't have a car payment, or if you didn't overindulge in clothing (or anything else for that matter). Or what if you had extra money every month because you lived in a home or rented a place you can actually afford?
Don't be fooled into thinking it's ok to over spend on needs. If you have trouble figuring out where to draw the line, let the suggested percentages be your guide. It will give you peace, I promise!
I gave up on indulgence years ago; I don't get my hair and nails done, I only own a small amount of inexpensive clothing, I don't have the latest (or much at all) in technology and I drive a modest car. The best part? I don't give a rat's rear what anyone thinks about it! I'm debt free, I travel a lot, my emergency fund is fully funded, and I'm living my best life!
And hey, if you can truly afford to have it all, more power to ya! And if you can't afford it but choose to have it all anyway, I won't be mad at you, but I will roll my eyes if you complain to me about your money problems 🙂
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