I read your column recently about 12% of your take home pay should be your food budget. My family spends closer to 15% but included in that is other household expenses, such as cleaning supplies, health and beauty (toothpaste, shampoo, etc.) and other small incidentals. When considering the 12%, was that factored in and if not, what do you consider to be a reasonable percentage for the additional costs? The way I understood your column, these were not added in as they are not consumable. I’d appreciate your feedback.
Thanks for reading my column and for asking this question. Let’s revisit the Ideal Budget
Here’s the thing, 12% is barely enough to cover food. I get that. That’s why on my Ideal Budget, 12% is really for food and beverages only. It will be a challenge to get food expenses under 12% each month, and if you try and add in household expenses like paper towels, trash bags, and shampoo, you’ll definitely go over.
Shopping at big box stores like Target and Costco makes budgeting even more difficult. While shopping there you may purchase beauty products, food, and cleaning supplies, all in one trip. Your budget can get messy, fast. The easiest way to combat this confusion is to add the miscellaneous category to your food budget. By adding in the 3% from miscellaneous, you now have a 15% food/miscellaneous category which can cover food, beverages, cleaning supplies, etc.
But if 15% is still not enough to cover all your needs, you’ll have to make room for it in your budget by cutting something else. This goes for just about anything the Ideal Budget doesn’t cover like, childcare, student loan payments
, and credit card payments
. If it’s not on the budget, you’ll have to find areas where there is wiggle room and use those to cover your needs.
The two budget segments I see being cut most often are 10% for savings and 5% for charity. Of course, I don’t recommend doing this because saving and giving to charity are important, but if you need to pay off debt
, pay for childcare
, etc., these are the two most common areas to steal from. Beyond those you may have savings in medical (5%) or entertainment (5%) you can use for other needs.
The Ideal Budget is titled that for a reason, it’s the ideal. If you are paying off debt
, or have high childcare costs
, the money has to come from somewhere. Customizing the Ideal Budget to fit your spending is acceptable, as long as you aren’t maxing out every category. Tapping out every category will cause major problems in the future.
Peter Dunn a.k.a. Pete the Planner® is an award-winning financial mind and a former comedian. He’s a USA TODAY columnist, author of ten books, and is the host of the popular radio show and podcast, The Pete the Planner Show. Pete is considered one of the foremost experts on financial wellness in the world, but he’s just as likely to talk your ear off about bass fishing.