Budgeting for Beginners | WaterStone Bank

When it comes to creating a budget, there is no one-size-fits-all solution. Your budget is unique to you: It factors in your income, expenses, and goals for the future. 

But there are some general budgeting guidelines you can refer to when creating your own budget. These common categories might not perfectly mirror your own expenses and priorities, but they offer a guideline for mapping out your monthly allocations. 

Check in with these budgeting buckets to see how your budget compares.

Savings: 10 to 15 percent

This includes everything you set aside for savings, such as an emergency fund, retirement accounts, and college savings. 

Housing: 25 to 35 percent 

Nobody wants to be “house poor,” which is why we suggest limiting your housing budget to no more than 35 percent of your monthly income. This includes mortgage or rent, property taxes, repairs, maintenance, and homeowner’s association dues. 

Food: 5 to 15 percent

Think groceries, dining out, delivery, and unplanned trips to the vending machine. Trying to save money in this category? Try to cut back on restaurant dining and follow our tips for saving on groceries

Clothing: 2 to 7 percent

A modest clothing budget will allow you to update essentials like footwear and winter gear and purchase new clothes as kids grow and sizes change—plus enjoy the occasional splurge for a special occasion.

Transportation: 10 to 15 percent

This category covers transportation of all types, from car payments to bus passes. Don’t forget to budget for fuel, maintenance, repairs, and recurring fees like license plate renewal. 

Medical and Health: 5 to 10 percent

Some health expenses aren’t covered by insurance, including certain medications, vitamins, supplements, and gym memberships. 

Insurance: 10 to 25 percent

This includes all types of insurance, such as life, health, homeowners or renters, auto, and jewelry. 

Personal expenses: 5 to 10 percent

Hair care, toiletries, personal care, gifts, extra spending money—it all falls into this bucket. 

Recreation 5 to 10 percent

Whether it’s a trip to Disney World or a Disney Plus subscription, it falls under recreation. This is your “fun” budget for vacations, movies, and more. 

Debts: 5 to 10 percent

This includes student loans, credit cards, and any other debts you may have accumulated—don’t forget to pay down debts each month. 

However you choose to allocate your money, there are always ways to keep a little extra cash in your pocket. For money saving ideas, check out our tips on the Top 5 Unnecessary Expenses Draining Your Bank Account and Easy Ways to Grow Your Budget.

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