![]() 30 percent of your monthly income should go to discretionary spending or wants: Items such as going to restaurants, vacation expenses and gadgets fall into this category.20 percent of your monthly income should go to savings and debts: Include everything from your student loan and credit card payments to retirement savings and emergency fund contributions.50 percent of your monthly income should go to your needs: Place items like housing costs, groceries, utilities, healthcare costs, and transportation expenses into this category.According to this budget percentage breakdown: One of the most common recommended budget percentages is the “50/30/20” budget. For example, you could lump housing-related expenses like your rent or mortgage payments, utilities and homeowners or renters insurance into one category. ![]() ![]() Once you’ve broken your costs down into individual expenses, you can lump some of them together into categories. Here’s a list of common budget categories to consider: Once you’ve converted your annual income and expenses into a monthly format, break them down into categories so that you can create budget percentages. When it comes to your expenses, you should review them from an annual perspective as well, as many costs - such as your car registration - occur annually. This step is particularly important if you are a freelancer or consultant and have irregular income patterns. To reach your ultimate goal of having a monthly budget, take your annual income after taxes and deductions, then divide it by 12 to get an average monthly income. The first step in learning how to budget your money is to list your actual income and expenses.
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