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People just getting started with budgeting often ask what percentage of their budget things like food, shelter, and transportation should be. A quick internet search revealed that there are no hard-and-fast answers. I’ve seen recommendations for transportation that are anywhere from 10 to 20%, for example. Housing seems to be the most stable, with various sites recommending anywhere from 20 to 35%. The important part is that your budget works for you. Percentages are useful though for comparison and evaluation purposes. For example, if you find that you’re spending 50% of your income on a snazzy new car, and your goal is to save for a house, maybe you should consider reducing the amount that you spend on your car.

Out of curiosity, I decided to see what percentages I’m spending on various categories. Here is the breakdown, based on my monthly spending plan:

Housing – 33.5%
Food (groceries & meals out) – 16%
Utilities – 9%
Pets – 4%
Entertainment – 11.5%
Transportation – 12%
Health & appearance – 11%
Savings – 3%

It turns out that I’m on the high end of things in certain areas, and the low end in others. Note that these are my after tax and after deduction amounts — I have 7% automatically deducted for a 401(k). I’m actually kind of surprised at some of the percentages. I would never have guessed that the percentage for transportation would be so high, since I don’t have a car payment. Overall, I believe that looking at the percentages is beneficial AFTER you know what you’re spending, but I wouldn’t use general percentage guidelines to create a budget from scratch myself. Budgets (spending plans) are much more effective when they’re tailored to your individual circumstances, priorities, and desires.

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