- 35% for housing (mortgage/taxes, rent, utilities, insurance, maintenance),
- 15% for transportation (car payments, gas, repairs, insurance, parking, transit),
- 10% for saving (long-term saving),
- 15% for debt repayment, and
- 25% for life (everything from groceries to entertainment, medical to childcare… In fact, everything that’s not in the other four categories.)
This is Gail Vaz-Oxlade’s, from Till Debt Do Us Part, pie chart showing how much of one’s income that should be spent on each category. I plan to follow this pie chart but make slight modifications to it to fit my situation like Gail suggests.
- Right now I do not have housing to pay for or debt to pay off so I can eliminate these categories. I will put 20% towards saving 40% towards current transportation and saving for my next car, 40% towards life.
- As soon as I start university I will have housing and debt to pay off so I will make modifications to this pie chart again. I will not need 35% towards housing so I will change that to 30%, I will live on campus and will only need 15% for transportation; I will put 25% to life, and 30% for debt to pay off student loans so I can pay off my loans as soon as possible.
- When I graduate from university and settle down I will have to make modifications again, this time I will be buying/renting a bigger home and will need the full 35% for housing, I will make life 25%, I will need more for transportation to drive to work so I will put 15% toward transportation, and 25% towards debt to get rid of student loans. Once those are paid off, I’ll change debt to 0% because I will no longer have debt, and move the rest to savings making savings 25%.
Overall, by budgeting, My goal is to save up for the things I want and need, such as schooling, house, car, and entertainment, and to live within my means.
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