On the Money
I’ve said it plenty of times before, and I’ll reiterate it again: Americans have a serious lack of budgeting skills. That’s why I was thrilled when On The Money put up a special budgeting calculator that breaks your monthly take-home income down into down into expense categories that are based on rule-of-thumb expense allocation.
CNN’s On the Money blog used CNBC’s Carmen Wong Ulrich’s budgeting advice to put together a great pie diagram to indicate where American’s income allocations should go and what percentages should make up each budget area. I thought it was an excellent and informative idea, not to mention fun to play around with.
The Budget Pie Chart breaks expenses down into these categories:
- Housing 30%
- Transportation 18%
- Debt 10%
- Food 14%
- Household 7%
- Savings 10%
- Everything Else 11%
Just dump you monthly take home pay into the menu, and the budget pie calculator automatically determines what your monthly allocation of expenses should be according to the aforementioned percentages. Obviously you can do some tweaking of your own to move expenses around. For instance, I take public transit to work so I was able to move a lot of the 18% that was budgeted towards transportation to my debt category.
Obviously everyone’s budget should be tailored to their unique expenses and spending habits, but CNN’s Budget Calculator is a great start. Check it out and let us know what you think of it.
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- Here’s Help with that Debt Reduction Resolution
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This pie chart isn’t that great. Especially if you have lower income. It doesn’t realistically account for health care expenses or childcare expenses of the average person, which definately take up more than 11% of most people’s budgets on their own.
@Leslie – I believe the reason they don’t account for health care expenses is that people tend to pay their healthcare expenses (be it health insurance or an HSA account) with pre-tax dollars, meaning they have it taken out of their pay before they even receive their paycheck. This calculator divides up your take-home pay, so it wouldn’t include that.
As for childcare expenses, you’re absolutely right. I don’t believe that 11% would realistically be enough for lower-income individuals. I imagine it would probably be upwards of 20% of your total budget, which would take some serious moving around. I do think it can be done; however, you’d probably have to cut down on the food and transportation budgets — and maybe even cut savings down to 7% or so.