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Blogging for Change Blogging For Change
by sitecore\kmcgrigg on March 17, 2010

Wouldn’t budgeting be simple if there was one formula that fits every person in every situation? Unfortunately, money management is not one-size-fits-all. Of course, there are formulas out there that you can try to follow. For example, here is one commonly accepted way to allocate your spending:

  • Housing (20-35%)
  • Personal Care (2-4%)
  • Food (15-30%)
  • Insurance (4-6%)
  • Personal Debt (20% max)
  • Health (2-8%)
  • Transportation (6-20%)
  • Utilities (4-7%)
  • Clothing (3-10%)
  • Misc. Items (1-4%)
  • Savings (10% min)

If you follow this formula exactly, you might be practicing sound money management techniques.  However, I don’t necessarily recommend that you try to shove your square peg into this round hole—that just isn’t the way life works.

Consider an example from a different (though surprisingly similar in many ways) industry.  In 2005, the USDA replaced their horizontally-orientated Food Pyramid with the MyPyramid food guidance system. The system provides options to help people make smart choices. According to the USDA Website, each person has a unique Pyramid that is right for them based on their situation.

I think the USDA’s approach also works for money management. Consumers need to make their own unique smart choices. For help, they can look to guidelines rather than hard-and-fast rules. And so, I offer you the Financial Pyramid as a guideline on how to allocate your spending.  

Financial_Pyramid

You might be wondering what's at the top of the pyramid to make it worth running up all those stairs.  Well, that's up to you too.  What are you working toward?

Posted in:  Budgeting Advice

Comment(s)

benita says:
August 06, 2012

we need a form to help us start a budget do you have anything like that?



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