Antonio, Carson City
Jose Smith makes $40,000 a year. Let’s go through the spending percentage guidelines for Jose.
HOUSING (Guideline is 35%)
Jose should spend about $1,166 a month on housing If Jose is trying to save for a house, he may want to spend lower than this and save money for a down payment. ($14,000 is 35% of $40,000. $14,000 divided by 12 is $1,166 a month.)
DEBT (Guideline is 15%)
Jose should keep his debt payments to $500 or less a month. These payments should be making a dent in the debt. The goal is to pay off the debt and put this money toward something else, like savings. ($6,000 is 15% of $40,000. $6,000 divided by 12 is $500 a month.)
TRANSPORTATION (Guideline is 15%)
Jose should keep his transportation expenses to $500 a month. This includes car payments, gasoline, insurance, and maintenance.
OTHER (Guideline is 25%)
If its not a housing, debt, transportation, or savings expense, it should go into the “Other” category. Jose should spend no more than $833 on his other expenses. ($10,000 is 25% of $40,000. $10,000 divided by 12 is $833 a month.)
SAVINGS (Guideline is 10% minimum)
Jose should be saving a minimum of $333 a month for retirement, future financial goals, unexpected expenses, and emergencies. When high interest debt is paid off, he can apply the money in his debt category to savings. ($4,000 is 10% of $40,000. $4,000 divided by 12 is $333 a month.)