Establishing and following a budget helps your family meet daily needs while preparing for the future. It enables your family to get more for its money and keeps you out of debt. The percentage breakdown for budget expenses recommended by various economic advisers recommends the maximum amount you should spend in each category. As your income rises, the percentage of what you spend on specific items should decrease, enabling you to increase your savings.
Average American Family
In 2007, the average American family spent 34.1 percent of its income on housing, 12.4 percent on food, 5.7 percent on health care, 10.7 percent on pension and insurance expenses, 5.4 percent on entertainment, 17.6 percent on transportation, 3.8 percent on apparel and services, and 10.3 percent on miscellaneous expenses. These percentages don't reflect recommended percentage expenditures, however, according to a report by Debra Pankow, a family economics specialist at North Dakota State University.
Recommended Guidelines
The University of Florida website includes a chart prepared by Josephine Turner, Ph.D, family and consumer economics, suggesting percentage ranges for household expenses. The percentages are based on take-home pay. The percentage breakdown for budgeting expenses according to the chart are: 13 to 15 percent for food; 32 to 42 percent for housing; 15 to 25 percent for child care; 3.8 to 4.2 percent for clothing; 2 to 5 percent for personal expenses; 17 to 18 percent for transportation; 6 to 7 percent for medical; 0 to 10 percent for education and recreation; 0 to 10 percent for gifts and contributions; 2 to 10 percent for miscellaneous and emergency expenses; 0 to 10 percent for savings; and 0 to 11 percent for insurance.
Mortgage Payment
The United States Department of Housing and Urban Development, or HUD, is an agency of the federal government whose mission is to create and strengthen the housing market and to help meet the need for affordable housing. HUD states that a homebuyer should spend no more than 29 percent of his monthly gross income for a monthly mortgage payment, according to Federal Housing Administration guidelines. Gross income is income before deducting for taxes.
Preparing a Budget
When preparing your own household budget, make a list of all of your current expenses. Write down what you're currently spending in each category. Set your financial goals, such as saving money for a down payment on a house or paying off credit card bills. To stay within your budget, you may need to find ways to cut certain expenses.