Aug 01, 2015


Budgeting Basics: Put Your Money In Its Place!

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budgeting net income

Chances are you know your big-ticket monthly expenses and you’ve probably got a good idea of your average take home pay.  But do you know how much you should actually spend on each major expense category in your budget?

Don’t have a budget yet?  Don’t worry!  You can download a copy of a fabulous Excel budget workbook here to help when budgeting net income.

Gross or Net Income?

Any time you want to give yourself a budget scrub down, make sure that you are using your net monthly income to determine your monthly spendable income.  Net income is the amount of money that is deposited into your checking account after deductions for federal taxes, state taxes, health insurance, company sponsored retirement plans, and the like.   On the other hand, gross income is what I like to call, your warm and fuzzy ego boost.  You might love to think about your gross income, but your financial truth lies in your net income.

If your pay varies due to changes in your scheduled hours, commission, or bonuses, I highly suggest that you estimate your take home pay by using the lowest amount you would expect to bring home.  You never want to overestimate your take home pay and find yourself short of cash in lower earning months.

Recommended Budget Spending Guidelines

Housing Expenses

budgeting net incomeRecommended Guideline: No more than 30% of your net income.

If you own your home, include:

  • Mortgage(s)
  • Homeowner’s Insurance
  • Property Tax
  • Homeowner’s Association Fees
  • Repairs/Maintenance
  • Utilities

If you rent a home or apartment, include:

  • Rent
  • Renter’s Insurance
  • Utilities

Food, Paper, and Cleaning Supplies

Recommended guideline: No more than 15% of your net income


  • Groceries
  • Meals at restaurants
  • School lunches
  • Snacks and beverages out
  • Household cleaning supplies

Transportation Expenses

Recommended guideline: No more than 15% of your net income


  • Car payment(s)
  • Car insurance
  • Fuel
  • Maintenance
  • Tags and licensing
  • Tolls and Parking
  • Bus/train/taxi fare

Medical Expenses

Recommended guideline: No more than 5% of your net income

  • Out of pocket medical/dental expenses
  • Co-payments
  • Prescriptions
  • Glasses/Contact Lenses
  • Vitamins/Supplements

Miscellaneous Expenses

Recommended guideline: No more than 10% of your net income

Includes, but not limited to:

  • Communication/Entertainment expenses (internet, cable/satellite, home phone, movie rentals, et cetera)
  • Pets
  • Educational/extracurricular expenses for children
  • Clothing
  • Tobacco/Alcohol/Gambling
  • Life Insurance
  • Personal care and well-being


Recommended guideline: 10%+ of your net pay

Remember, your savings goals are always a work in progress.  Your goal is to save as much as you can even if you can only manage 5%.  Every little bit helps!

Charitable Contributions

Recommended guideline: 10% of your net income

There are many ways you can give back to the community.  Money is just one of many ways you can contribute.  Here’s an article with ways you can make a difference by providing something other than money.

Monthly Debt Repayment

Recommended guideline: No more than 5% of your net income

Looking to pay down debt and liberate yourself from climbing interest rates and fees?  PowerPay can help you make a plan to pay off your bills quickly while saving money on interest!

How Do Your Spending Percentages Stack Up?

I created a nifty Excel worksheet you can download to see how your spending habits stack up against our recommended percentages.  You’ll be able to enter the total for each expense category in your budget and instantly see what you should be spending on each category and how it compares to what you actually are spending.  It also has a nifty chart for my visual learners!

If you have any questions, feel free to post them in the comments sections below!  Happy budget crunching!



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Adrianna Domingos-Lupher

Adrianna Domingos-Lupher

Adrianna Domingos-Lupher, MA, is an Accredited Financial Counselor and proud graduate of the University of North Carolina at Chapel Hill. She is a military spouse and mami of two who is constantly reinventing her approach to career and family life. She is the owner and writer at Military Money Chica and the Co-founder of Military Spouse Bloggers. On her personal blog, Military Money Chica, she seeks to empower military spouses to make the most of their money, family, and the military experience with a sprinkling of Latina sabor. Military Spouse Bloggers is the first professional network and agency that seeks to help military spouses build a portable and sustainable career in new media.

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