The recommended budget percentages you need to know

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If you want to stop living payday to payday, start paying off debt and becoming wealthier, then these recommended budget percentages will help you to do just that.   Before I knew about these recommended budget percentages, I used to save a bit, spend a bit, and if we had anything left over at the end of the month, I would spend a bit more. 

I knew that I was saving something each month and I knew that I was paying into my teacher's pension each month, so I assumed that all was good.  We had no debt, we had some money saved and we invested a little money too. 

Job done!

However, it wasn't!

recommended monthly budget percentages

I had always thought that I would retire about 55, and was looking forward to having more time to relax, play sport and socialise!  Then I discovered that my teacher's pension was going to pay out less than £7,000 per year.........if I retired at 60. 

I spent a few years feeling miserable about the thought that I would have to continue working longer.  I didn't think I had any option - my pension wouldn't be enough to support me, so I would just have to work until I could afford to retire.

Thankfully I started reading about money mindset and financial freedom, and invested in a couple of courses about them.  The combination of that made me realise that I had choices in life, and that if I wanted to retire early, then I long as I started planning how I could afford to.

Recommended budget percentages

That's when I discovered the 50-30-20 budget.  It was devised by Elizabeth Warren, a US senator and one of the top 100 most influential people in the world.  Along with her daughter, Amelia Warren Tyagi, she wrote a book "All Your Worth: The Ultimate Lifetime Money Plan

In it, they suggested that in order to become financially secure, and grow wealth, we should allocate our take-home pay as follows:

  • 50% - Anything that is VITAL. Groceries, Housing, Transport, Heat/light, minimum payments on debts/loans. These are the basic needs, but may vary from person to person.
  • 30% - Wants—Things that you would like, but that are not vital.
  • 20% - Savings/extra debt repayments/retirement savings.

If you have a lot of debt you perhaps want to cut your “wants” to less than 30% and allocate more than 20% to paying off your debts. suze orman budget percentages

How does it help?

By comparing my monthly budget to these percentages, I could see how much I was spending in each area. 

I very quickly realised that although we were saving a little, it was nowhere near enough to allow me to live the life in the future.  At first this depressed me, because I felt that my income was fixed, and I couldn't see how to cut my expenses. 

However, that is a cop out!

If you have very little in savings, and no form of emergency fund and are having to meet large debt payments out each month, you know that you are in a very financially precarious position.  A redundancy or an illness can really throw your entire family into financial meltdown. 

I want to help you to avoid that scenario, and help you to secure your future. I also want to help you to have the freedom to do what you want, whether that be part-time working, early retirement or taking some time off to travel. 

Whatever it is that you want, we need to start laying the foundations for that now. Very few people's finances will fit neatly into this 50 30 20 however the ideal scenario is that if we can plan around this then this will allow us to create wealth and financial security.

budget percentages suze orman  

Where to start?

A good place to start is by looking at how your figures stack up against the 50/30/20 recommended budget percentages. 

Take 3 month's worth of bank statements, and work out the average monthly spend for each area of your spending.  This post will help you to work out how you can easily and quickly work out these figures, and it will help you to easily manage your money moving forward.

 This might help you to see if there are any major issues in any one area of your budget. If you’re serious about creating financial security, then the time has come to get serious about looking at these figures.  

How does the allocation of your take-home pay look?  If it is very different from the 50/30/20 rule, could that be contributing to your worries about money?  Are you under pressure in one area of the budget, which has a knock-on effect on the other areas?

There are a few areas that you might need to look closely at.

printable budget plannerHousing payments

Rent or mortgage payments can often take up a huge chunk of income. 

Some people might have taken on bigger mortgages than they can really afford, while others might be trying to pay it back so quickly that it makes day to day living really difficult. 

Some are throwing away money, by not checking to see if they can get a cheaper mortgage - it's a really simple process, and one that can potentially save thousands of pounds. 

Others might be renting in a really expensive area, and are struggling to see a way out of that. If you find yourself in the position where these payments are taking up a large proportion of your income, then you might need to ask yourself some difficult questions and take action.


Another common area where people can end up spending large amounts of money, is on cars.  Again there are questions that you can ask yourself that could potentially save you money. 

It's worth considering if you need the car/cars. 

Could you get by without?  Could you reduce the number of cars in the household?  Is the way you are paying for your car a good option?  Could there be a cheaper option?  Do you need to have a car with such a high spec - could you make do with a cheaper car?


Childcare costs are also a huge cost for many people, so it's really important to take some time to check if you can reduce these costs.

However, the first thing to consider is using the government website to check if you are entitled to help with childcare costs, and check if you are eligible for tax-free childcare. 

The above suggestions should get you started on reducing the cost of your needs, and help you to get your spending plan to look more like the 50 30 20 recommended budget plan.

If you want to see other brilliant and simple suggestions for reducing your weekly costs, then you might like this blog post.

Or why not come along and join my Your Money Sorted group, where we chat about money related topics every day? 


Eileen x


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