Percentage of Income: Where Does All Your Cash Go

Posted by bpaul as Budget, Money Management

Do you know what percentage of your gross income goes to savings, housing, transportation, debt, and other expenses? Many experts suggest households should allocate no more than the following percentages of your gross income to each category.

10% Savings - save at least 10% of your income throughout your working life. Pay yourself first!
35% Housing - includes mortgage or rent, utilities, insurance, taxes and home maintenance.
20% Transportation - includes car payments, auto insurance, tag or license, maintenance, gasoline, parking and transit.
15% Debt - includes student loans, retail installment contracts, credit cards, personal loans, tax debts and medical debts.
20% Other - includes all other expenses: food, clothing, entertainment, childcare, medical expenses and charity.

After pulling up my budget allocation sheet on Quicken my percentage of income looks like this:

15% Savings
45% Housing
10% Transportation(will be higher very soon because wifey needs a new car)
10% Debt
20% Other

What was kind of alarming to me was how much my wife and I are paying out for our household expenses. The biggest chunk is our mortgage which is understandable, but we will be refinancing very soon. If you would to read a related article on this topic please go to MSN Money.