Back to All Posts

Day 15: Recession-Proof Your Finances

Mar 30th, 2020 • Jasmin Snyder

We’re halfway through! You’ve made it this far, let’s finish the program strong. Today Pete dives into the Ideal Household Budget, check it out:

Ideal Household Budget

Why ideal? Budgeting is kind of an ideal. You’re saying this is ideally how much I want to spend on clothing this month. This is how our ideal budget works. You start with your take-home pay. Your take-home pay is what enters your bank account on a monthly basis (meaning your taxes, 401k, and other benefits are already taken out). This is how you’ll determine what percentage is ideal for each category and what your current actual spending is. It’s also worth noting, this pie chart is based on normal circumstances. If you’re unemployed or struggling to make ends meet right now, this isn’t going to be all that helpful. Come back to this when your situation has stabilized.

25% Housing (rent or mortgage): While this is definitely realistic in the majority of the country, if you live in a large city or on the coasts you will struggle to make this a reality. That’s okay, but the rest of your budget will have to reflect this reality.

15% Transportation: This includes car payments, insurance, regular maintenance, car wash subscriptions, monthly parking permits, public transportation passes, etc. This is a sneaky category that can really add up, especially if you have an expensive car payment.

12% Groceries & Dining Out: While your food habits have likely changed in the last few weeks, this tends to be a category that can get out of control quickly.

10% Savings (or debt): Reminder your 401k isn’t factored into this pie chart because it’s already taken out of your paycheck. If you have an IRA or contribute to a retirement account outside of work don’t include that amount in your take-home pay. This is specifically for saving for an emergency fund, college fund, buying a house, going on vacation, etc. If you have debt you can replace it here, but if you have no emergency savings try to save into that first before you pay extra on any debts.

10% Utilities: This includes a variety of expenses like gas, water, electricity, wifi, cell phones, etc. This is a category you can do some cuts in if you’re looking for ways to make your pie chart work.

5% Charity: Times are tough. If you’re privileged enough to still have a job and stability, please give to your community. Many, many people are struggling to feed their families right now.

5% Entertainment: Typically this category includes movies, the theater, sporting events, subscriptions, etc. While some of those are off the table for the moment, this is a category that can easily be reduced to make up for overages in other categories.

5% Medical: If you have benefits through work this 5% will be easy enough to meet. It will only include prescriptions, health club memberships, and the like. But if you have a plan outside of work it’s unlikely 5% will cover it. Again, your pie chart will have to adjust to meet this need.

5% Clothing: Typically this category includes new clothes for work, clothes for growing kids, or seasonal clothing needs. If you have consumer debt, i.e. a credit card this is an easy category to remove altogether unless there’s a necessary purchase.

5% Holidays & Gifts: It can be hard to budget for this monthly since gifting occasions are seasonal. You may spend $1,000 on gifts in December but nothing in June. One way to do this is to set aside the time to go through the calendar and determine all the gifting and holiday expenses you may incur in each month of the year, the total can either be spread out over 12 months or individually budgeted per month.

3% Miscellaneous: This can include pet insurance, life or disability insurance, etc. This is another category that will quickly get swallowed up if you have overages in other categories.

If you’d like a free downloadable and fillable budget worksheet simply scroll to the bottom of this page 👇and sign up for our newsletter. Once you confirm your email address you’ll receive the free worksheet!

As always, don’t forget to like the Hey Money Facebook page to be alerted of these daily live streams!

If you are looking for more personalized guidance don’t forget that a Hey Money expert is always ready and waiting to help you sort out this mess. Use code ‘cheese’ to get a 10% discount on a monthly subscription just for being a part of the 30 day recession-proof your life program. Stay strong!

Sign up for email updates