How much should you spend on housing, car, groceries, and gifts?

The most common question that I get on a daily basis is this: How much money should I be spending on _______?

It's a fair question. So here is the definitive answer in writing. Below you will find the ideal household budget.

But here is what you need to know. If you don't spend the maximum amount in one category, then you can allocate more money to another category. In other words, let's say that your household transportation costs are only 5% of your income, then you can feel comfortable to split the "extra" 10% towards other categories. That is exactly how I live the financial life that I want to live. I have very low transportation cost, therefore dining out and housing receive a higher allocation of my income. In addition, I don't spend much on entertainment, therefore my allocation towards savings is above 10%.

People who fail to operate on this "give and take" basis often find themselves in debt. Many financial households operate on 110% of their income. You just can't do that. I encourage you to compare your household expenditures to this chart and this philosophy. I would also love to hear your thoughts. Leave a comment on the blog in regards to your favorite trade-out. What one category do you scrimp on so that you can spend more on another?

And if you are a tither, then this budget is based your income after your tithe. In addition, this also excludes your 401(k) savings which usually is taken out of your income prior to it being considered "take-home" pay. Therefore if you save 15% of your gross income towards your 401(k) and another 10% of your take-home pay towards general savings, then you are a rockstar. Check that. A rockstar probably wouldn't save any money.

The chart is based on take-home (net) pay.