Here’s How Much Financial Experts Say You Should Spend On Each Of Your Monthly Necessities
Getting your financial life in check can sometimes feel like the hardest puzzle in the book — between keeping track of your coffee spending, making sure that rent is paid on time, commuting back and forth from work, all while hanging onto some semblance of a balanced diet. It’s just hard.
In an age where Instagram pages make everyone else’s lives seem so much more luxurious and put together than yours, sticking to a budget often feels like a big sacrifice. Still, it’s one of the easiest traps to fall into to think that you can’ keep to a budget.
Here is how much the experts recommend you spend on each of your most important monthly expenses. Consider this your budget starting point.
How Much Should I Spend On Food A Month?
Spending on food is probably one of the most basic and important expenses you incur every month. It’s simply unavoidable.
The average amount people spend on food a month ranges from $150 to $300 depending on where they live and what kind of food they are buying. The key to saving money on food is to create a food budget both for groceries and eating out in order to maintain self-accountability, especially when out and about. Don’t go to a grocery store without a pre-made shopping list. And simply stop eating out in a given month if you’ve gone through your “going out” budget.
To stick to a budget inside the grocery store, US News recommends shopping for in-season produce, sticking with store-brand products, and making use of coupons and loyalty programs. Shoppers should avoid premade foods, in-store impulse traps (usually the flashy stuff at the ends of aisles), and—this last one might bite—meat.
But smarter spending begins even before you head into the store. It can help to take a snapshot, figuratively or literally, of your pantry at home to know exactly what you need; and when you go, adopt a “get in, get out” mentality to avoid making any unplanned purchases. Other tips include shopping at night to avoid distractions, shopping on a full stomach to avoid impulse buys, or befriending sales associates for good price advice.
How Much Should I Spend On Rent A Month?
While some people operate on the outdated advice of putting 30 percent of your income towards rent, figuring out what exactly to pay is much more complicated. Lendkey advocates for paying a fixed amount for rent each month. For students with high college debt, a 43 percent rule may be a better fit. Earnest.com suggests going with a “50/30/20” rule where 50% of your pay goes to housing, utilities, groceries, and transportation, 30% goes to non-essentials like clothing and dining out, and 20% goes to savings and paying off debt.
Cutting back on other housing expenses like furniture and room size and making sure the place you go with is near public transportation is also something to consider (all things that could save you money). It’s also helpful to consider homes where utilities are factored into the costs, giving you the ease of mind of having fewer monthly expenses to keep track of. And it always help to befriend (or in the least, maintain a polite acquaintance with) the landlord for those times when your up for a rent increase.
How Much Should I Spend On My Car A Month?
For those of us who live in the city and use public transit every day, paying for a car might not be a relevant expense. But for residents in states like Texas and California, where driving is the main method of getting around, paying for a car—which often means paying for a whole host of things other than the car—can be a major headache. Saving money on your car means finding ways to get around for less, hopefully decreasing the cost of driving for you and for the earth.
Much like paying rent, the best way to figure out how much to pay for a car requires a complex understanding of your financial situation each month. Spending on a car should be decided based on how much you make and how much of your income you’re willing to spend.
Creditdonkey.com has a useful chart for what to spend on monthly car payments based on your income level, but essentially, they advise that you not spend more than 20% of your income on a car. Of course, this rule changes when accounting for how you live. Some alternative rules to follow include frugally spending 10% of your salary on a car, spending just a total of 36% of your salary on all your loan payments (that includes mortgage, car loans, student debt, etc.), or following a “20/4/10” rule where you put down 20% of the total payment on a car, pay off the car over four years with 10% of your salary.
US News suggests that you not spend more than 22% of your take-home pay on car expenses (including fuel, insurance, and maintenance). If the average American household at the end of 2017 makes about $60,000, and their take-home pay comes out to $42,000, that would mean that a monthly budget for paying for everything car-related shouldn’t be more than about $780.
A great tip for figuring out how much you’re willing shell out each month for a car is to set a trial period where you “pay” yourself each month however much you’d pay for a car payment. This will help you become accustomed with partitioning your monthly salary for auto expenses and will give you a clearer picture of where to start when looking for a car.
How Much Should I Spend On Entertainment A Month?
It’s important to take a step back and enjoy life no matter who you are and what your financial situation is. Still, it’s important to take the right steps to make sure you aren’t blindsided by overly costly “fun” bills, but also that you have enough wiggle room to keep a spark of spontaneity in your life.
Marguerite Ward at CNBC recommends that when spending on restaurants, movies, bars, manicures, massage, boutique fitness, or road trips, it is deeply important to keep expenses to 10% of your monthly take-home income. That means if you bring in $3,000 each month, that you should set aside $300 to use on any of your going out expenses. Similar to tips for shopping for food and budgeting for eating out each month, setting aside a specific number on your entertainment spending will help prevent impulse from attacking your wallet.
The Simple Dollar recommends cutting $20 off entertainment spending each month to rack up savings by the end of the year, a nice little tip to keep in mind if you are looking to save some cash.
How Much Should I Spend On Clothes A Month?
When it comes to clothes, the external pressures of fashion and practicality can pull you in diverging directions, making shopping for what to wear a high-stress activity. Sometimes when the anxiety gets to you while out, poor purchasing choices can wreck even the most well-laid plans to “get what you need and go.” Regretful purchases pile up, and, even more regrettably, a closet becomes trapped in a cycle of “I have nothing to wear” and the subsequent “I need to go shopping.” Sticking to what you need, and making sure any clothing purchase checks off the boxes for practicality, versatility, and tastefulness will make sure that you don’t end up with bulging closets, empty wallets, and nothing to wear.
That being said, if you are dealing with debt or other financial issues, clothing is an expense that should take the backseat.
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