This should account for everything from nights on the town and takeout, to hobbies, leisure travel, and subscriptions. 30% on Wants: The next 30% of your spending goes toward your desires, the things that keep you happy.
If your budgeted expenses are greater than your income, then you’ll need to identify areas where you can cut spending. Make Adjustments: Subtract your expenses from your income and see whether you are in the positive or negative.For categories of spending that change over time, examine recent statements from your bank or credit card provider to estimate how much you tend to spend in these areas each month. As you’re tallying these expenses, make note of which ones might fluctuate from month to month, as well as which ones are fixed. Tally and Understand Your Monthly Expenses: Write down all of your expected monthly expenses, including your mortgage or rent, groceries, utilities, transportation, debts, and entertainment.Also be sure to include other sources of income like Social Security payments. If your income varies from month to month, use an average based on the last year or start with your low-earning month of that year as a baseline. Calculate Your Monthly Income: Start with your monthly after-tax income or “take-home” pay as your spending limit for each month.Make better decisions backed by data and insights Learn More