Healthy Budget Breakdown for Any Salary?

Hi guys,

So YNAB takes care of all budgeting and tracking mechanics - great! As I started using YNAB, I can now track all my spending, as well as all my passive accounts, very well. However, the next question is: How much should I actually be spending in various categories, given my income?

So as I see it, an important factor for improvement of financial habits is to actually determine and stick as closely as possible to a reasonable, healthy budget breakdown. What % of income should go towards housing? Transportation? Saving? Etc. I understand everyone's will be different, however there are likely some general suggested guidelines for this.

So I started this topic for YNABers to share resources (e.g. websites, articles) that have helped break down general spending categories in a way that helped achieve financial health. Please share your breakdowns, or habits, that allow you to live worry-free, steadily pay off debt, and save healthy amounts regularly.


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    • nolesrule
    • Been waiting 5 years for the Stealing From the Future fix...
    • nolesrule
    • 3 yrs ago
    • 5
    • Reported - view

    The book All Your Worth breaks it down into 3 categories.

    Needs - 50%

    Wants - 30%

    Savings - 20%

    These are calculated on your after-tax income, and they have specific definitions in order to help determine what falls into what category.


    I think this is more helpful, because costs in specific categories are going to vary depending on where you live. It's designed in this manner because spending that falls into Wants or Savings are optional and can be "turned off" in the event of income loss.


    Interesting example... A car loan falls under needs, because you have to pay it even when your income stops. Saving to pay for a car in cash (and then later buying the car) falls under saving, because you save for it, and once you buy it, it's paid for. Of course the insurance on it is a need in either case.

    Like 5
      • nolesrule
      • Been waiting 5 years for the Stealing From the Future fix...
      • nolesrule
      • 3 yrs ago
      • Reported - view

      To take it a step further with the Transportation, it also depends on how you pay for it. I bought a car 2 years ago in cash. It cost 20% of my salary at the time (I'm using salary since I know the numbers off the top of my head), but I had saved up for it. But if I spread that cost over 10 years (which is the minimum length I plan to keep the car), it starts at 2% of my salary and decreases as my salary increases. This year my car purchase amortization amount equates to 1.75% of salary.

    • nolesrule question for you... do you have your master categories  separated for  the 50/30/20 rule?

      I wanted to figure out if I'm somewhere in this range with how I've spent my income this year, but realized my categories don't make it very easy to find out. I have  8 master categories (not including my "income for next month" category in nYNAB 😉) and I'm tempted to rearrange everything into needs/wants/savings.

      Like 1
      • nolesrule
      • Been waiting 5 years for the Stealing From the Future fix...
      • nolesrule
      • 3 yrs ago
      • Reported - view

      ChicagoFlyer I don't  have it broken out in the budget according to the needs/wants/savings separation exactly, because I like to keep my categories grouped together for other purposes.

      • nolesrule
      • Been waiting 5 years for the Stealing From the Future fix...
      • nolesrule
      • 3 yrs ago
      • 1
      • Reported - view

      For the record, our needs are under 30%, and our savings (as the book calculates it) closer to 45%, so while I found the book informative, it did not change our lives because we were already managing things well thanks to YNAB and good decision making.


      But it can certainly help as a guideline to see if you're on the right track generally. It give a lot more flexibility than specifying percentages to more granular categories of spending.

      Like 1
  • Thanks! So how does the book justify the 50/30/20 breakdown?

      • nolesrule
      • Been waiting 5 years for the Stealing From the Future fix...
      • nolesrule
      • 3 yrs ago
      • Reported - view

      Turquoise Pony (da415ea2ba0b) Read the book. :)

      I picked up a used copy for 50 cents. I plan to give it to my daughter when she gets older.

  • This is a breakdown I got from the Pete the Planner podcast/website:

    (this is after taxes and retirement contributions are already taken out)

    25%  Housing costs

    15%  Transportation

    12%  Groceries and dining

    10%  Savings

    10%  Utilities and phone

    5%  Charitable giving

    5%  Entertainment

    5%  Medical (this is the one I can't personally imagine - I am way over on this one)

    5%  Holiday/gifts

    5%  Clothing

    3%  Miscellaneous

    Like 1
      • Ivory Storm
      • Ivory_Storm.3
      • 10 mths ago
      • Reported - view

      Rema How is childcare not on this list at all? Easily 20% of my salary,  & I spend more on childcare than I do on housing by a mile. 

      and Pete the Planner is not alone! I think it's funny how often childcare is left out of these conversations. 

  • Thanks. This is pretty detailed. I think it's ok to deviate from it here and there. What's interesting here is the conservative 25% for housing.

  • Yes, and the author points out that housing costs vary a lot depending on where you live.  He emphasizes that you have to realize that you cannot have it all, if you have to spend 30-40%  of your income on housing, then maybe you need to drive a less expensive car or take fewer vacations, etc.  But it is interesting to compare my numbers to the guidelines.

    Like 2
  • We have never really used any guideline on what to follow for budgeting breakdowns.  We have a kind of unique situation in that because we are a military household, our housing and healthcare costs have always been covered by the military -- and those can be the two largest budget items for many families.  

    We also don't have children -- there's another incredible cost to most families that we don't have.

    We simply aim to keep our fixed costs as low as we can.  That means we don't have cable TV, we don't have car payments or debt that would have to be paid in the event of a job loss, we don't finance our cell phones, etc.  Just some ways that we try to keep fixed costs down so we can enjoy saving and a have a few other luxuries instead.

    We save between 35%-40% of our take-home pay.  That's not realistic for a lot of families with mortgages and kids and medical costs.  

    Anyway, so many families have different situations and different goals and priorities.  We just try to do what feels best to us.

    Like 1
  • My budget percentages change yearly to accommodate my shifting goals and priorities.  In 2017, my focus was on building up my on-budget liquidity and savings categories. I set aside more than half of my take-home all year to fill a handful of emergency fund subcategories, one mid-term saving goal, and max out all my true expenses categories for the year.  In 2016, however, my entire focus was on eliminating debt (personal family loan, car loan), and that left most of my categories at zero.

    I'm still working on the details of my 2018 template and fitting in numbers based on next year's goals, an introspective exercise I traditionally enjoy at this time of year. It's looking like my 2018 template will be:

    • 50%. Monthly essentials
    • 16%. True expenses (irregular/annual expenses)
    • 12%. Emergency funds
    • 22%. Savings (next car, electronics replacement, retirement investing)
    • *(12% of my gross income is deducted at source before taxes for mandatory pension contribution)

    I have come to the conclusion that the perfect budget breakdown by percentage is the Holy Grail, and that each budgeter's quest to find it, perfect it, and consistently use it may yield a happy and successful life.  Each person needs to adjust any template formula to fit their reality, goals, and values, and then be willing to regularly analyze it for relevancy.

    Like 3
  • To answer the title:
    As others have already hinted towards (or outright said,) there's no one-size-fits-all for budgeting, but the  50/20/30 rule comes very close to being that silver bullet due largely to is vagueness and its flexibility (as part of that vagueness.) In fact, my own numbers break down to somewhere around 45/20/35 after everything's said and done, and I'm extremely comfortable with my financial situation.


    To answer the next question:
    This seriously depends on your income. Maybe you make a decent wage, but housing fees where transportation is unnecessary are outrageous. Maybe housing fees further away are acceptable, but your transportation costs rocket. There are tons of "ifs" and many answers for each scenario. The key is to figure out what answers work best for your "ifs," and the best way to do that is to analyze your expenses.  The next time you're looking at your budget, ask yourself some of the following:

    • How much am I spending on bills, and what can I do to lower those expenses?
      Sometimes it's easy to cut down on bills. Cutting the cable is one way. Paying off a financed phone is another. Yet another is downgrading your plans when it makes sense to do so. (As a software engineer and general tech enthusiast, it's really hard for me not to spring for the highest-bandwidth internet option out there, but there's no need for that much bandwidth in a single-person household.)
    • Am I saving enough to cover the unexpected?
      This is almost never going to be "yes" simply because there's no way to know what you're not expecting. However, there are a few things to keep tabs on: Is there enough saved away to cover any insurance deductibles? Do I have enough being saved back to steadily increase my buffer? Am I making meaningful progress towards mid-term savings goals?
    • Are there any recurring expenses that can be reduced or cut?
      These don't have to be set monthly expenses, either; food and alcohol can quickly add up if left unchecked. Check for any regularly recurring expenses (monthly/quarterly/etc. subscriptions) that you don't necessarily need or use; these are prime candidates for being pruned. Additionally, consider buying in bulk if you have the funds to do so up-front, and the storage space to keep it. Paper goods, canned/frozen goods, personal hygiene goods, and many other products are typically(! not always!) cheaper when you buy in larger packages versus buying just one.

    I could go on, but I'll try to keep my wall of text from getting out of hand. The idea is that you need to know your own habits and be in command of them if you want a successful budget. They don't all have to change, but your budget will likely only be able expand to accommodate a few of them. Above all else, the one piece of advice that goes along with the 50/20/30 that is always applicable is to follow the order. As soon as the money comes in, allocate first for bills/necessities, second for savings, and then use what's left over for spending money on that which isn't absolutely necessary to survival. That may seem like common sense, but it's always worth reinforcing.

    Like 4
  • Thanks for the good advice!

  • I started budgeting by %-age earlier this year, and I split them out by categories.  Here's my journal on it.

    I actually started doing it because I wanted to give myself MORE money for things other than paying off debt.  Last year I was in serious get out of debt mode.  Now that I'm about to be debt free except for my house, because I'm refinancing my mortgage and including my HEL, I'm modifying my %-ages.

    These are each of my category groups in my budget, so it's easy to check my %-ages:

    10% Giving

    25% Save/Debt (I calculate this based on my take home pay after my work takes out 5% pre tax for my 401a and I max out my HSA, so it's not quite accurate, but easier to calculate within YNAB)

    24% Housing (includes utilities and maintenance)

    10% Transportation

    13% Food

    17% Fun/Life

    Once I have a fully funded emergency fund (half way there!) and have purchased a new to me vehicle, I might modify those %-ages, or just switch to the 50/30/20 plan others have mentioned, but I'd probably want to save more than that.  But bundling them that way would be a simplification, and I'm all about simplifying my budget so it's easier to stick with long term.

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