It's difficult to find the line between a need and a luxury, especially when you're considering how much you should spend on food and clothing. Some experts say that as long as you're contributing to savings, the rest of your budget matters little; however, others say it's important to clearly delineate between expenses you can't put off and those you can delay. Ultimately, choose the food and clothing budget percentages that work best for you.
Tracking Your Spending
Keeping a regular tally of your expenditures might reveal you're spending a lot more in one category over another. Your phone bill might be excessive or you might eat out regularly and end up with a skyrocketing food bill. You might have a weakness for sales and discover those new dresses hanging in your closet have taken up more of your income than you realize. Knowing your spending habits, in particular when you're just beginning to budget, is a first step to developing a budget to which you can stick.
If you choose to assign a percentage to each category, you might start with these recommended percentages: housing, 33 percent; utilities, 7 percent; food, 10 percent; health, 5 percent; transportation, 15 percent; entertainment, 5 percent; clothes, 5 percent; miscellaneous, 10 percent; savings 10 percent. These will change depending on your situation. For example, if you live in an area where you can walk to work or school, your transportation costs might be less. If your health costs are higher than 5 percent of your income, adjust your budget accordingly. The percentages are starting points.
MSN Money expert Liz Pulliam Weston recommends dividing your budget into needs, wants and savings using a 50-30-20 proportion. She asserts more detailed percentages are difficult to recommend since household financial situations vary widely. Pay for all the basic expenditures you must make every month with 50 percent of your after-tax income. These include food -- but not dining out -- housing, utilities, transportation, child care expenses and loan payments. Then, use 30 percent of your after-tax income for all of your wants, including entertainment, vacations and gifts. Eating out and clothing are also in this category. The final 20 percent of the budget goes to savings and debt repayment. If credit card bills are paid in full every month, Weston emphasizes, these amounts are expenditures and not debt.
Reducing Food and Clothing Costs
You might discover after tracking your expenditures that you spend far beyond your budget percentages of 10 percent for food and 5 percent for clothing. For example, on a take-home income of $2,000, a total food budget is $200, and clothing budget is $100. If you are spending more, look for ways to cut back. Buy bulk staples such as rice and pasta, eat in-season vegetables and ditch expensive junk food. Reduce the temptation to make shopping for clothes a regular habit; when you do shop, check out secondhand and thrift stores.
- PBS Frontline: Teacher Guides By Film -- The Madoff Affair -- Student Handout -- Pay-Yourself-First Budgeting
- "USA Today"; A Budget Can Help Young People Cut Their Spending; Mindy Fetterman; November 2006
- MSN Money: How Much Should You Spend On...; Liz Pulliam Weston; April 2010
- One Green Generation: Five Ways to Cut Down on Food Costs
- CBS News: "'Pay Yourself First"; Tatiana Morales; February 2009