Budgeting: Norms

Nattie Gilbert: I was recently emailed asking me what I recommended for budget percentages. Since I didn't know what our budget percentages are, I couldn't answer.  I decided to investigate what ours were and what other people recommended.

Our Budget

After investigating other sources, I discovered that we were similar. We are higher in some categories and lower in others.

Consumer Credit Counseling Service

Bare Bones Budget from National Fdn for Consumer Credit

Budget Example

If every budget example is different, then how do you know what to do. First there are some basic recommendations.

1. Save or invest at least 5%.
2. Debt payments shouldn't exceed 15%.
3. Mortgage companies want house payment to be no morethan 25%. Housing or rent costs should be kept within your means. We struggle in our area due to booming economy and high rents.

There are a few basic steps in order to set up a viable budget.

All budgets should be specific to your needs and goals. There is no set amount that works for everyone.

Make sure that you set realistic amounts. It's unrealistic to take on another loan that would cut your allotted food expenses in half when you're already struggling to stay within your budget.

Treat savings used for goals and emergencies as a bill. If you wait to save what's leftover at the end, there will never be anything left over.

Involve your family members. Spousal cooperation is necessary for any budget plan to succeed. I let my children participate in our budget discussions. Since I started doing this, my children understand money better. They are less likely to whine when they can't get something. They are also proactive in our frugal goals, especially when they know if we spend less on food there is more for fun. I also hope that they won't struggle like my husband and I did to learn to budget as adults.

Track, track, track. I truly hate this part and it makes me feel obsessive. But if you don't track, you won't know exactly where your money goes and where you need to focus. How you track depends on your personality. Computer programs like Quicken work great for some people, but not us. We need something quick, easy, and accessible to each of us. Therefore we use a notebook with lines for categories. All discretionary expenditures are listed in like categories such as food, recreation, and gas. We total them every day to see where we are. I've discovered if I compare budgeting to dishes (daily) instead of spring cleaning (yearly), I have much more success.

Refrain from impulse buying. "Oh sure," you say. If I could o that, I wouldn't even be reading this. I have a confession, I impulse shop, too. I believe most people do. The key is to find out why, what are your weaknesses and is there another way to satisfy your need or overcome your weakness. I often impulse shop when I feel ugly (which usually coincides with PMS). After analyzing this tendency and realizing that I probably can't overcome the feeling, I've brainstormed other ways to feel prettier than buying something. Treating myself to a bubble bath, good book and soft music satisfies the need to feel pampered and pretty without spending money. If you track your expenditures for at least 3 months, you will be able to see your weak spots. Then you can begin to overcome them.

Budgeting requires a commitment to ongoing tracking, analysis and implementation of frugal alternatives. A successful budget doesn't happen without hard work and time.

Gary Forman of the Dollar Stretcher explains why budgets fail. "When you analyze it, there are really three reasons why people are unsuccessful in budgeting. The most common causes of failure are unrealistic goals, quitting too soon, and misunderstanding what a budget really is."

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