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Remember, most individuals sell their house in 7-10 years. Most banks will not require PMI if you have a 20 percent down payment on your house. Ideally, you can save yourself the added cost of PMI by saving money for a down payment. One of your biggest purchases will be your house and it’s best to keep this expense at a minimum. I’ll go into further detail later, but try and have a modest first home. Your mortgage, home insurance, PMI (Private Mortgage Insurance), property taxes, or rent should fall within this category. Housingĭave recommends 25-35 percent of your income be dedicated to your housing. If you’re feeling a little lost, that’s ok! I’m a fan of keeping my money in Vanguards VTI fund. Dave Ramsey is a big fan of mutual funds, but I prefer ETFs or exchange trade funds. Personally, I invest in my companies 401k and I have a Vanguard account. If your company has a 401k with a company match, take the match! Free money is always a win. The fourth step is to invest 15 percent of your income into a pre-tax savings account. Again, keep your money somewhere accessible! Once your debt is paid off, it’s time to build a fully funded emergency fund of 3-6 months expenses. The next baby step is to pay off all debt. You should keep the money somewhere accessible, such as a savings or money market account. $1,000 is the beginning of your emergency fund and should be able to cover most emergencies. So how do you start saving and investing your money?Īccording to the first “Dave Ramsey Baby Step,” you should set aside $1,000 for emergencies. Savingsĭave Ramsey recommends setting aside 10-15 percent of your income into savings and investing. You should be aiming to increase your happiness and others through the power of giving. However, if giving away 10-15% of your income is going to put you further into debt, don’t do it! The goal isn’t to cripple your families finances. For some people this looks like Tithing to your church, donating money or supplies to animal shelters, or any other worthy charity or causes you support. Charityĭave Ramsey recommends giving away 10-15 percent of your income every month. Let’s take a little in depth look into each category. You wouldn’t need much of a transportation budget if you lived in Portland Oregon and biked to work every day. You do not have to follow them if they do not make sense for your family. It’s important to remember that these are only recommended percentages. Personal 5-10% – free spending and hobbies Medical/Health 5-10% – Doctors visits, prescriptions, well-being Utilities 5-10% – water, power, sewer, gas, etc. Saving 10-15% – investing, 401k, retirement planning, cash savings Here are the recommended budget percentages (Also with a friendly pie chart!): Thank you for your support! Dave Ramsey recommended household budget percentages, also, zombies? Dave Ramsey’s recommended household budget percentages This post may contain affiliate links which provide a commision and supports this blog.