Dave Ramsey’s book, The Total Money Makeover, is one of the most popular personal finance books ever written. His ideas about debt, investing, and money management are all based on sound principles that you’ll find invaluable. Over the years, I’ve learned a lot from Dave, and I’d like to share some of what I’ve learned with you.
For many of us, retirement is a distant dream. We may have visions of a beach house in the Caribbean, or perhaps a nice set of golf clubs, or maybe a nice yacht. With the thought of “retiring” in our head, we will, inevitably, begin to look at our retirement plans and wonder how much money we will need to have to live the life we want. As a financial expert, it is my job to help people take stock of their finances, so they can make educated decisions around their savings and investments.
The Dave Ramsey method for handling money is a really simple concept. Basically, it boils down to this: You need to know what your net worth is. What does that mean? Well, we all know that money is made by earning a paycheck, but it’s also made by saving money. And it’s made by capitalizing on opportunities like buying stocks or rental properties. What we don’t know is how much we have saved when we turn our money over to the bank.
Dave Ramsey’s Household Interest
When it comes to personal finance, Dave Ramsey’s budget percentages have always been in his top five. It’s perfectly normal to feel overwhelmed by the world of personal finance and budgeting, and constantly ask questions like these:
- What should I save each month?
- How much should I allocate to nutrition?
- What should I do to pay off the debt?
You’re human if these numbers bother you because, trust me, you’re not the only one. Fortunately, budgeting becomes a little more manageable with tips like Dave Ramsey’s recommended percentages. Dave Ramsey, the famous financial guru, went bankrupt in 1988 . Yeah, you’re right. At 18 he goes into real estate, earns about half a million dollars a quarter, , and then loses everything. He is living proof that anyone can overcome financial setbacks, and gives hope to anyone who is in the same boat. If you’re struggling to manage your finances, these Dave Ramsey budget percentages will help you get back on track. Let’s cut to the chase. Budget Percentage Summary Dave Ramsey
- Gift (10%
- Savings (10%)
- Power (10% – 15%)
- Utilities (5% – 10%)
- Housing (25%)
- Transport (10%)
- Health (5% – 10%)
- Insurance (10% – 25%)
- Recreation (5% – 10%)
- Personal expenses (5% – 10%)
- Other (5%)
DISCLOSURE Some of the links listed here are affiliate links that can make me money if you click on them, at no extra cost to you. I hope you find the information here useful! Thank you. Fast Money Alarm! Did you know you can make money by taking surveys onSurvey Junkie? You can earn$3 to $7 persurvey and join for free! It takes less than a minute to sign up with Survey Junkie, and you can start making extra money online right away! Related posts about budgeting and saving:
Guide to Budgeting – Dave Ramsey Budget Percentages
Let’s take a look at Dave Ramsey’s recommended percentages to help you budget. Now Dave Ramsey has made it easy for anyone to start budgeting with these percentages. However, don’t put too much pressure on yourself by deluding yourself into thinking you need to meet these exact percentages. Let’s take a look at Dave Ramsey’s budget category percentages and you can decide if this famous budgeting method is right for you. This is the essence of Dave Ramsey’s budget breakdown:
- Donation (10%) – Donation and charity to a platform of your choice
- Savings (10%) – Savings 10% of your net income after tax
- Meals (10% – 15%) – This food budget should include groceries, meals away from home, etc.
- Utility costs (5% – 10%) – Water, gas, electricity bills, etc.
- Housing (25%) – Mortgage payments, taxes, etc.
- Transport (10%) – Fuel, car expenses, etc.
- Health (5% – 10%) – Visits to doctor, dentist, etc.
- Insurance (10% – 25%) – Life, health, car
- Leisure (5% – 10%) – all expenditure on entertainment, movies, etc. should be within this budget.
- Personal expenditure (5% – 10%) – Groceries, personal care, etc.
- Other (5%) – any missed or forgotten payment.
While this is not the usual Dave Ramsey budget percentage pie chart, it will give you a rough idea of how much to allocate to each category of your income.
Dave Ramsey didn’t put this category first for nothing. If you have the opportunity to give to others, do so. This action cultivates gratitude, and you will learn to appreciate the wealth you already have. As a percentage of your monthly budget, Dave Ramsey recommends giving 10% of your income. Don’t think 10% is too small and a small donation won’t make a difference. That’ll be it.
Try to set aside 10% of your income each month. When it comes to saving money, remember these three things;
- fully funded emergency savings and
- Savings on major purchases
Dave recommends building a starting emergency fund of .000 USD as a buffer before debt is paid off. Remember these three steps as a savings rule
- Set up a start-up fund for emergencies
- Pay your debts
- Accumulate 3 to 6 monthly expenses
Power (10% – 15%)
Sometimes this category takes some getting used to, especially if you like going out with your friends, eating out and ordering too many Venti Caramel Macchiatos with extra caramel at Starbucks. This percentage of Dave Ramsey’s monthly budget should include your groceries and your total food consumption. Meal planning is ideal if you are struggling with this problem. Buy food in bulk, buy seasonal produce and plan ahead. To get you started, here are some 94 recipes you can try on a budget!
Utilities (5% – 10%)
A rather explicit category. All your bills – for gas, electricity, heating and water – must be between 5% and 10% of your income. You can include all your subscription services, cable, internet and phone bills. If you find that these expenses represent more than 10% of your income, it may be time to review all plans and see which ones you can reduce. Switch to a cheaper phone or internet plan, scrap some subscription services, ask yourself honestly if you don’t need all these services.
Housing costs are by far one of the biggest expenses for a family. Whether you are considering paying off your mortgage early or want to get a head start, try to keep your mortgage payments below 25% of your income. You want to live in your house in peace without the burden of a mortgage. So put some numbers on the table and play with Dave Ramsey’s budget calculator to see if you can afford a pool and basketball court at the back of your house.
Anything that requires you to travel from one place to another requires money. If you use public transport, you will need to spend money on monthly bus or train tickets. This 10% should include all rides you take with Uber or Lyft.
Health (5% – 10%)
This is a great percentage for the Dave Ramsey budget category, because illness is inevitable and you will need money to take care of yourself. This category includes all medical appointments, dental treatments, etc. Health insurance does not fall under this category. This breakdown simply shows how these allocated percentages will change from month to month. If you get too excited and break your leg after seeing The Lion King, use that interest to fund your medical expenses.
Insurance (10% – 25%)
Ah yes, the banal subject of insurance. We know we need it, but because it’s not tangible, no one wants to spend money on it. I may sound like a broken record, or you may have heard it a million times from a friend, a vendor, or the neighbor’s cat, but insurance is necessary. This protects you in case of unforeseen circumstances. The types of insurance you should have include: So don’t miss Dave Ramsey’s spending percentages.
Recreation (5% – 10%)
Want to join a weekly pottery class in town? Make sure they stay within these percentages. Want to attend a mini-concert because an independent singer is visiting your city? Make sure they stay within these percentages. The holidays are looking good, aren’t they? Make sure they stay within these percentages. You got it. We all agree on work-life balance, but I don’t know about you, but I sometimes overdo games. I used to leave the house whenever a friend invited me over for dinner and drinks, not realizing how much that drained my bank account. So have fun, but do it responsibly and try to get them into Dave Ramsey’s budget percentage calculator.
Personal expenses (5% – 10%)
This mission applies to any purchase you wish to make. Yes, again, do it responsibly. I’ve maxed out my credit cards too many times and I don’t want anyone to repeat my mistakes. This distribution includes shopping on Amazon, buying new clothes, personal care, home decor, etc.
This item is intended to cover expenditure not provided for in the budget or unforeseen expenditure. As much as we’d like to budget every penny, sometimes it’s not possible. Use this fund to pay for anything you forgot to include in the general budget, trust me, there are probably a few small things.
Is Dave Ramsey’s interest realistic?
Dave Ramsey himself says that the percentages he gives for the budget are just a guideline. No two household expenses are alike and no two individual expenses are alike. These percentages can easily be broken down for someone who is single, has few obligations and lives alone. However, for a family of four, these exact percentages may not work. Match Dave Ramsey’s budget breakdown percentages to your budget, as you can only stick to a budget if it is realistic and achievable for you.
How much does Dave Ramsey recommend you save per month?
According to Dave Ramsey, we should try to set aside at least 10% of our net income after taxes. However, this depends on your financial situation. Maybe you should do the math and see how much you can save. In general, these are the few funds you should try to set aside: It doesn’t matter how much you have to save each month, what matters is that you start saving.
Why use budget interest?
It’s a well-known fact that when you set up a budget, you are essentially setting aside money for different purposes. But what is budget interest? With a percentage budget, you spend a certain percentage of your income on different spending categories in your life. As with Dave Ramsey, he has laid out a plan for anyone to follow if they don’t know where to start. Why use budgetary interest? With budget interest, every dollar of your income has a purpose. When you decide where you want your money to go, you get a complete picture of your finances, making it easier to reach your financial goals. The following budget percentages are generally used Once you receive your salary, divide it into three parts: 50% for basic necessities and expenses, 30% for paying off debts or saving, and 20% for investments. Once you receive your salary, divide it into three parts: 70% for basic necessities and expenses, 20% for debt repayment or savings, and 10% for investments.
- dave ramsey’s savings
When you use a percentage budget, your finances become streamlined and easier to control.
What should the percentage of my budget be?
Now that you know what the budget rate is, how do you determine your budget rate? The first and easiest option is to use Dave Ramsey’s suggested budget percentages as a guide to get started. This makes the transition to budgeting easier, since the categories are already programmed for you. If you can adjust your income based on the parameters provided by Dave Ramsey, you can use his advice and adjust the percentages as you go. However, if you’re still not sure how to allocate your income to different expenses, ask yourself the following questions to get a more complete picture. There is no such thing as a perfect budget that fits all families, and if you are told that, you should know that it is not true. It doesn’t matter if your budget is different from thousands of people on the internet, just practice what works for you. Try making your own Dave Ramsey budget pie chart and use it as inspiration.
Alternatives to Dave Ramsey’s percentages
So if Dave Ramsey’s budget percentages seem a bit overwhelming, relax, you can start with the other budgeting methods listed below and continue with them later as you get your finances under control. As for budgeting, it is important to see it as an organizational system rather than a complex task. The last thing you want is the stress of managing your finances, and budgeting should help you feel freer with your finances. Try these alternatives to Dave Ramsey’s budget percentages for a change:
1. 50/30/20 Budget
What is the 50-30-20 budget rule? Senator Elizabeth Warren explains this classic method of budgeting in her book All Your Worth: The ultimate money plan for life. If your finances are a mess right now, don’t worry, you’re not alone, because studies show that 65% of Americans have a minimum savings 50/30/20 a simple budgeting method to start, similar to Dave Ramsey’s income percentages. This way of budgeting is ideal for those just starting out or for those who don’t have the patience to keep track of every expense and break it down into several detailed categories (like me). Once you have your income, divide it into 3 categories:
- 50% of your income should be spent on your needs/expenditure
- 30% of your income should be spent on what you want
- 20% of income must be set aside or used to pay debts
50% for needs/expenditure
What expenses fall into this category? Think about your daily and regular expenses. Expenses such as housing, utilities, health insurance, food, gas, etc. are important expenses. These are your needs, as these expenses will continue each month. If your expenses exceed 50% of your income, review them and look for areas where they can be improved. Can you switch to a cheaper rate for mobile phone and internet? You may want to buy groceries in bulk and prepare meals to save money on groceries and meals. Whatever your fixed costs are, they cannot exceed 50% of your income.
Ideally, you should spend no more than 30% of your income on basic necessities. Expenses like shopping, vacations, movie nights, a few more drinks during a girls night, hangovers in the morning – you know what I’m talking about. I know it’s very tempting to spend money these days, especially when the sale seems too good to resist. However, these expenses will affect your finances, which is what we want to avoid, so try to keep them within 30% of your income.
20% on savings/debt
There are two areas that fall into this category: Save for emergencies, retirement contributions, 401(k), Roth Ira, or even if you’re saving for a specific purpose, like a wedding or a trip. Credit card debt, I’m looking at you. This high-interest debt should be a priority if you have it. Here is a detailed description of the 50/30/20 method, which should be used with caution and adapted to your finances.
2. 70/20/10 Rule
What is line 70 20 10? Line 70/ 20/ 10 is similar to line 50/ 30/ 20 , but with a different composition. Once you have your salary, spend 70% of your income on living expenses, 20% on savings or debt repayment, and invest the last 10% of your income. They should look something like this:
|70% (monthly costs)||20% (saving or debt repayment)||10% (Investment / Charity)|
|Utility payments Gas, health insurance Groceries, car payments||Savings Retirement savings Repayment of credit card Repayment of student loan||401 (k) Roth Ira Mutual funds Stock trading Cryptocurrency Donation|
Now that you are familiar with the basic rules of budgeting, 50/30/20 and 70/20/10 , make your choice and see which one suits your lifestyle.
3. Silver envelope system
This method is also known as the cash only system and it is exactly what it sounds like! You may only use cash for your expenses, no credit or debit cards are used here. To begin with, you need to determine your expenses. In what areas do you spend the most? Identify and list these areas and how much you spend monthly or bi-weekly in these categories, depending on how often you get paid. For example, it could look like this:
- Power supply – USD 300
- Utilities – USD 250
- Entertainment – USD 200
- Car payment – USD 150
You must then provide an envelope for each category and fill it with the required amount. In the case of food expenses, since you have allocated USD 300, you must spend ONLY that amount. When your envelope is empty, you don’t have to spend any more. This system allows you to view your spending habits in each category. What used to be reckless spending with a credit or debit card is now becoming a deliberate thing. When you hand over cash with each transaction and see it shrinking in the envelope, you tend to assess the necessity of that transaction, and that’s what you pay attention to when you swipe your card. You should know that you can easily lose it since you have cash on you. Fortunately, there are nice envelope pockets for money envelopes to keep your money organized and safe with this system.
If you’re bored with the idea of tracking expenses and compound interest, but want to better organize your finances, mutual funds are perfect for you! Savings funds are ideal for large or recurring expenses that you know will occur each year or month. A sinking fund is a fund you set up, usually in the form of a savings account, in which you set aside money for periodic payments. For example, if you know that your car insurance is due in August and costs about USD 200, you can start a savings fund in January for that payment and save USD 30 each month until the due date. When you pay, your money is already in your hands! That way, you don’t feel like you’re taking a large amount of money out of your paycheck. If you have multiple expenses planned, you can try this method.
5. Reverse budgeting
With this method, instead of meticulously tracking your spending and saving what’s left over, you’ll do the opposite. Reverse budgeting is when you pay yourself first. What does this mean? This means that when you get your paycheck, you pay all your bills, set aside money for savings and investments, and do whatever you want with the rest of your money. I use this to save money! If you take care of your savings and investments immediately after you are paid, your back is indirectly turned.
6. Zero-based budgeting
Zero budget is when you give every dollar a task. With this method, you assign each dollar to expenses, debts, savings, or all three components. The idea is that your income minus your expenses should equal zero. With this method, you are aware of the money coming in and going out, and can avoid spending money you don’t have.
What to do with 20,000 euros in savings
And most of all, congratulations for saving 20K ! This is no small task, and you did it! So how about we make this 20K grow even more? Here are some tips on what you can do with the savings of 20K : Now that you have applied these tips and increased your savings to the next big number, 50K, read this article about what you can do with it.
So we went through the famous Ramsey budget percentages. With these percentages as a guide, do you think you can start taking action to get your finances in order? It’s the small steps that are important, because getting control of your finances is not easy. They have the champion!
Dave Ramsey’s Household Interest
Dave Ramsey is a financial guru and author, who has written several books on personal finance that have sold millions of copies and been translated into 17 languages. His website is the most popular personal finance blog on the internet. The blog is formatted as follows:. Read more about dave ramsey budget spreadsheet and let us know what you think.
dave ramsey budget percentages pdfdave ramsey budget calculatordave ramsey budget spreadsheetdave ramsey living expensesdave ramsey budget appbudget percentage breakdown,People also search for,Privacy settings,How Search works,dave ramsey budget percentages pdf,dave ramsey budget percentages calculator,dave ramsey budget calculator,dave ramsey budget spreadsheet,dave ramsey living expenses,dave ramsey budget app,budget percentage breakdown,dave ramsey 50/30/20