# How to Estimate a Single Household Budget

Keep your receipts for accurate budgeting.

Single people who live on their own need to budget their paychecks carefully so that they can save money while paying the bills. Single people have great need for an emergency fund; and the lower your income, the greater the need. The single-household budget aims for an ideal balance between net income -- after taxes -- and expenses. You may have to adjust these percentages if you live in an area with excessively high housing costs, such as New York City, or expensive winter heating. These percentages, however, should be your budget goal.

## Step 1

Allocate no more than 24 percent of your income for housing. This is close to the traditional advice of keeping the housing payment to no more than one week's pay. If your housing payment is significantly higher, then consider getting a second job or moving to a less-expensive neighborhood. As an example, if your pay is \$2,500 per month, then 24 percent equals \$600.

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## Step 2

Budget no more than 14 percent of your pay for food. This includes meals at home, snacks and lunch at work, going to the sports bar with friends to watch the game, and any money that you spend to build up a pantry. Unlike your rent or mortgage payment, the food category is a flexible part of the budget. If you have an unusually-high expense in another category, you can trim the allocation for food. If you make \$2,500 per month, spend \$350 on food.

## Step 3

Budget approximately 14 percent for the transportation category if you own a vehicle. Singles who have clear title to their cars and a good driving record will spend much less, due to lower insurance rates and the lack of car payments. If you ride public transportation, then you need only a small fraction of this amount. This would amount to \$350 for someone earning \$2,500 monthly.

## Step 4

Set aside 8 percent of your pay for utility payments. You may need more during the winter months if you live in an area with extended periods of freezing weather. Add your utility bills for the previous 12 months, and divide by 12, to arrive at a monthly average. If it is much higher than 8 percent of the budget, contact your utility company for suggestions for cost-cutting measures, such as installing a timer on the hot-water tank. Someone earning \$2,500 would set aside \$200 for utilities.

## Step 5

Allocate 6 percent of the budget for health care expenses. This includes your premiums, co-pays and deductibles. Staying with the same \$2,500 example, 6 percent equals \$150.

## Step 6

Allocate 12 percent for debt repayment and 9 percent for savings. If you have minimal debts, however, increase savings to meet your goals sooner. You would allocate \$300 for debts and \$225 for savings if your income is \$2,500.

## Step 7

Allocate 4 percent for clothing expenses, including dry cleaning and alterations. Clothing is another flexible category, especially if you wear a company uniform and do not need to buy work clothes. You can spend \$100 per month on clothes if you earn \$2,500.

## Step 8

Set aside 5 percent for recreation and 4 percent for charity. These two categories are flexible if you should need the money elsewhere in your budget. Allocate \$125 for recreation and \$100 for charity with the example income of \$2,500.

#### Tip

If you prepare the budget using percentages rather than dollar amounts, your spending will stay in proportion as your income increases or decreases.

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