Too Much Month Left at the End of Your Money

Have you ever had too much month left at the end of your money?  That is what John and Mary implied when they were explaining their situation about having difficulty making ends meet each month.    “We make a decent income but it seems that we do not have enough money at the end of the month.”

  In the last article, I shared about to make the monthly budget work more effectively.   This month, we are going to take a closer look at what healthy percentages within your budget should look it.  These percentages are simply guidelines or recommendations to assist in figuring out what is a good range for each category.  It is okay if you are over slightly in one or two categories as long as you are under in a few other categories. The bottom line, you must spend 100% or less of your monthly income. 

Dan Miller says, “Begin to “see” the fulfillment of your dreams by setting clear goals and plans of action.”  Managed money has more muscle to help you reach your goals faster.  Here is a general percentage table to guide a family of four for each spending category. 

Charitable Gifts                        5-10%

Savings                                      5-15%

Housing                                   25-38%                       

Utilities                                     5-10%

Food                                          5-15%

Transportation                         10-15%

Clothing                                    2 - 7%

Medical                                     5-10%

Personal                                     5-10%

Recreation                                 5-10%

Debt                                          5-10%

When you write out your monthly budget, figure out where you are within the recommended percentages.  If one category is over the recommended percentage, what can you do?  You need to cut down on one or more other categories so make sure you are not over the 100% for expenses.  Finding out the percentages of each category can be a real wakeup call in identifying trouble spots in your finances.

 I strongly believe that charitable gifts and savings should come out first, or you may not have money for them at the end.  Both are key components to a healthy lifestyle.

Next come the four walls, food, housing (and utilities), transportation, and clothes.  Do not pay into any other category until you have taking care of the four walls! 

After that, you can list your expenses and figure out what you are legally obligated to pay, such as medical, credit cards, and cable/phone service.

Finally, you can then start buying items that fall under categories like recreation, fun money, entertainment, vacation, gifts, luxury items, and replaceable items. I love this quote from Jim Rohn; “Discipline is the bridge between goals and accomplishment.”  I encourage you to discipline your spending now, so you can accomplish your financial goals later.

The next article will be about celebrating the holidays without overspending.  Let me know what you do each month to effectively plan how to spend your money.  You can email me at ed@finnertyfinancialcoaching.com.  Each person who submits an entry will be entered into January’s raffle to give away over $50.00 in resources.

Happy Thanksgiving from Finnerty Financial Coaching.

Ed Finnerty

Finnerty Financial Coaching