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Spending Plan / Track Budget

Introduction

"93% of millionaires... stick to the budgets they create."

Chris Hogan

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-Source⁠

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If millionaires stick to a budget how much better is it that you do the same. If you would rather not use a paper or planner here are 3 great budgeting tools.

Nerd Wallet App | Free & Paid -

Link⁠

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Every Dollar App | Free & Paid -

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Excel Sheet |

Free⁠

(Join her email list) by Lauren Greutman &

Paid⁠

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I look at the transitions, categories of spending and cashflow sections. I ignore all other features.

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Nerd Wallet App⁠

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I personally use Nerd Wallet but I have to say the other two options are better for budgeting. For me it is hard to beat the free features this brings to the table.

You vs You

The most important steps are understand how you currently spend, start allocating 100% of your income to your goals by category (Envelope System so to speak) and roll with the punches. If you trend down on spending over time and never give up you are better than the average American.

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“Many couples believe that the solution to their financial problems is increasing their income. However, a divided approach to managing money can be far more damaging to a relationship than low income or lack of financial resources."

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-Source⁠

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Manage Less To Win More

My wife and I prefer to only tightly manage the categories we always over spend in. They just happen to be most of the same categories as from this study of how must Americans choose to reduce spending.

68 percent cooked more often instead of eating out

66 percent spent less money on clothes or beauty products

55 percent cut down on meal expenses

46 percent skipped social or extracurricular activities

39 percent opted to not plan a vacation

13 percent took a supplemental or part-time job

7 percent moved to a cheaper home

-Source⁠

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Mind you this is not a list of absolutes. This just means for example you take a large vacation every other year rather than yearly.

My wife and I also had to create a rule of a max spending amount. If we spent over $100 we had to discuss and agree on it prior to the purchase.

Compare

There is danger in comparing yourself to others if that becomes our sole focus. I've prepared several budget breakouts as a reference not a prescription for you and your household.

The guide, unlike Ramsey, recommends spending 25% or less on housing monthly. Also that you allocate at least 1% of your homes worth for home maintenance yearly.

Based on the Ramsey books I have ready these are the ranges I uncovered by category.

Dave Ramsey Inspired Expenses Ranges

Dave Ramsey Inspired Expenses Ranges

Category

Ramsey Low %

Ramsey Low $

Ramsey High %

Ramsey High $

Ramsey Low

Ramsey High

Tith, Offerings & Giving

10%

$7,357

15%

$11,036

Saving or Invest

$3,679

10%

$7,357

Housing (Rent or Morgage)

25%

$18,393

35%

$25,751

Home Maintenance

Not provided

Utilities

$3,679

10%

$7,357

Food

$3,679

10%

$7,357

Transportation

10%

$7,357

15%

$11,036

Daycare/Child Support

Not provided

Clothing

$1,471

$5,150

Medical/Health

10%

$7,357

15%

$11,036

-Insurance

Personal

10%

$7,357

15%

$11,036

Recreation/Entertainment

10%

$7,357

15%

$11,036

Debts

10%

$7,357

15%

$11,036

College Funding

We leave kids’ college open and vague because it means so many different things all the way from people with grown kids to people with little kids or one kid or two kids or six kids or different incomes. It’s all over the place on college.

Total

102%

$75,044

162%

$119,188

Average American Income 2016 (Household)

$73,573

https://www.businessinsider.com/us-census-median-income-2017-9

There are no rows in this table

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Link⁠

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Here is a government study that helps you compare to the average American.

Average American Breakdown of Expenses

Average American Breakdown of Expenses

Column 1

2015

2016

2017

Column 7

Average income before taxes

$69,627

$74,664

$73,573

Food

$7,023

9.55%

$7,203

9.79%

$7,729

10.51%

-Food at home

0.00%

$4,363

5.93%

-Food away from home

0.00%

$3,365

4.57%

Housing

$18,409

25.02%

$18,886

25.67%

$19,884

27.03%

-Shelter

0.00%

$11,895

16.17%

--Owned dwellings

0.00%

$6,947

9.44%

--Rented dwellings

0.00%

$4,167

5.66%

Apparel and services

$1,846

2.51%

$1,803

2.45%

$1,833

2.49%

Transportation

$9,503

12.92%

$9,049

12.30%

$9,576

13.02%

-Vehicle purchases

0.00%

$4,054

5.51%

-Gasoline, other fuels, and motor oil

0.00%

$1,968

2.67%

Healthcare

$4,342

5.90%

$4,612

6.27%

$4,928

6.70%

-Health insurance

0.00%

$3,414

4.64%

Entertainment

$2,842

3.86%

$2,913

3.96%

$3,203

4.35%

Personal care products and services

$683

0.93%

$707

0.96%

$762

1.04%

Education

$1,315

1.79%

$1,329

1.81%

$1,491

2.03%

Cash contributions

$1,819

2.47%

$2,081

2.83%

$1,873

2.55%

Personal insurance and pensions

$6,016

8.18%

$6,831

9.28%

$6,771

9.20%

-Pensions and Social Security

0.00%

$6,353

8.63%

All other expenditures

$1,847

2.51%

$1,897

2.58%

$2,010

2.73%

Left over

$13,649

18.55%

$17,353

23.59%

$13,513

18.37%

Average annual expenditures

$55,978

76.08%

$57,311

77.90%

$60,060

81.63%

https://www.bls.gov/news.release/cesan.nr0.htm

There are no rows in this table

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Link⁠

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I took a 3 month snap shot from Mint app and compiled it so you can see there is no ideal breakout.

My Breakdown of Expenses

My Breakdown of Expenses