Article #3 in the Single women's retirement series: Evaluate current spending and begin to create a budget

Where did your Money go last month?

Using the data you collected in article #2, you now have the answers to that question!

Time to work with that data again. Insert your data into the following worksheet below.

NET PAY:

HOUSING
Rent/mortgage
Home owners insurance
Home owners association
Maintenance
Total

Budget experts recommend 30 - 35%.
Your percentage:

UTILITIES
Electricity
water/sewer/garbage
Phone
Internet
Cable
Total

Budget experts recommend 5%.
Your percentage:

FOOD:
Groceries
Restaurant meals
Total:

Budget experts recommend 15 - 20%.
Your percentage:

TRANSPORTATION
Car payment
Car insurance
Fuel
Maintenance
Total:

Budget experts recommend 10 - 20%.
Your percentage:

HEALTHCARE
Doctor
Dentist
Prescription medication
Total:

Budget experts recommend 5%.
Your percentage:

PERSONAL CARE
Clothing
Toiletries
Hair cut/color
Manis/pedis
Gym membership
Total

Budget experts recommend 5%.
Your percentage:

SAVINGS
Personal
IRA
401K
Total

Budget experts recommend a minimum of 20%.
Your percentage:

Break down is as follow:
15% for Retirement savings IF you are in your 40's; MORE if you are in your 50's and are behind on your nest egg accrual.
Emergency fund: 5 - 10% until you reach 6 months worth of living expenses.


The following categories do not have recommended budgetary percentages:
Pet expenses
Entertainment
Gifts
Child expenses
Debt
Charity

These items are assumed to be paid with monies "left over" after above items are paid for.

 My percentages are way, Way, WAY over the recommended levels!

( except for the savings portions, which are way, way under )

What can I do?

Cuts must be made in all categories. When one category is OVER, we must compensate the overage by scrimping in another category. The categories most easily decreased are Food and Personal Care, Utilities. Transportation is harder, but cuts can be made. The hardest category to whittle down is housing, especially when a mortgage is involved.

Another option in addition to reducing expenses is to increase income. Get a rent paying room mate, pick up more hours at your current job, get a 2nd job, or open your own home based side business. Building a profitable business takes some capitol and months or years of continuous effort; so it is not a good option for women who need more money and FAST.

Article #4 in the retirement series:

Strategies for trimming categories and creating a budget

 

Side note for people with budget surpluses:

The 50/30/20 Rules to budgeting

Under the 50/30/20 guide lines of budgeting, meaning 50% of net income covers all necessities, 20% covers Savings and Debt repayment, and all other "want" expenses are covered under the remaining 30%.

The problem with the 50/30/20 guide line is that most of us are spending way way more then 50% of our net income on necessities; especially single women! When basic overhead consumes too much of our incomes, then saving becomes extremely difficult, credit card fill gaps in our budget increasing our debt, and our charitable giving fades to extinction.


If these guide lines can work for your income and expenses then fantastic! It's the ideal situation if you can swing it! Effectively you are only living on 50% of your income, so even after savings, you will have plenty of money to have a great life style!