Personal Finance Guidelines for Stretching Your Paycheck

In this post, I would like to present personal budget guidelines, and hopefully, point out some potential holes or problems in your budget. The goal here is of course, to help you find ways to increase your disposable income, or the amount of money left over after all bills are paid. After reviewing this post, I hope to ignite some ideas in your mind about ways to cut expenses, and the things that are really eating holes in your budget. The following chart is a mixture of what other personal budget experts think, and my personal opinion of how to allocate your money:

Percentage of Income


Expense Description
10% God / Church
25% Housing
10% Utilities
18% Transportation
10% Food
2% Clothing / Attire
5% Misc. (eg Phone, Internet)
5% Medical Expenses
5% Other Debt
6% Savings
4% Entertainment


In the above table, I have listed the expenses in order of importance (to me, anyway). There are a couple of key things I want you to notice in reference to the above table:

Taking God Out of the Equation

The absolute worst budget mistake you can make. Without God and his blessings on your life, you are doomed. Do not cut your budget here!

Housing

This is where many people make a huge mistake. Many lenders will allow you to borrow up to 50% of your monthly income towards a house. This is ludicrous! Buy something within your means, or wait, and offer on several different houses at a discounted price to fit into your budget.

Transportation

Most people will not be able to fit into the 18% allocation for transportation, because they have a car payment that is 10-20% of their monthly income already. By the time you add the cost of gasoline and general maintenance, you are well above the 18% mark.

Miscellaneous

Cable TV, Long Distance Service, House Alarm System Service, Incredibly High-Speed Internet Service, etc. are budget killers. Stick to the basics in every service, and do without as many of them as possible!

Food and Entertainment

Do you need fillet mignon, caviar and two nights and the Weston 2-3 times a month? Do you have to have name brand cereal, Netflix, and StarBucks? Count up the cost of these and you will be shocked. Stay with off brands in the grocery store, and limit or cut back the high dollar, high frequency entertainment, I guarantee it will come back to haunt you. On a personal note, buying movies at Walmart in the $5.50 bin is a much better bargain than paying $3.99 at the rental store for only 5 nights of viewing.

I think you will find it remarkable how implementing just one or more of these personal budget guidelines and suggestions can make a difference in your family budget. The main thing is to group and count the cost of all the various expenses in your budget, and start trimming the fat. I track all expenses in my budget (except for entertainment) to make sure I do not overextend myself. If you are wondering why I do not track my entertainment expenses, it is because I hate wasting money, thus I have no budget for entertainment. This forces me to think twice about any entertainment expense, because I know it will put me over my total personal budget!