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Spending Guide Thumbnail

Spending Guide

Spending Guide

Piggy Banking off a previous edition we’ll add more color to budgeting and spending habits.

First thing we need to clear up – budgeting. Most people have a negative connotation of budgeting - they think it means limiting your spending - but that’s not always the case. Instead, it’s just a way to keep track of your spending to make sure it’s within a reasonable level compared to your income.  


Repeating this again because it’s important: know* your* spending*! (specifically, on what and how much). You’d be surprised at how many people don’t actually know this…they swipe away and either assume it’s covered or that they can worry about it later. When you put it all together you might be surprised as well.

Credit card data can be a great place to start to understand your spending. Many credit card companies will provide a year-end summary of your total spending and some even categorize it for you. You can build a pretty comprehensive view of your spending by using an excel or google sheet template (there are plenty publicly available!) to combine this data across credit cards or bank accounts. Or, simply use an app that does a lot of the work for you (Mint, YNAB and EveryDollar to name a few options). Don’t forget to adjust or forecast any recurring expenses that were new last year and for which you didn’t pay a full year’s worth.


Once you know your spending you can compare to see if you’re in a normal range. Below are some categories and percentages that could help identify if you might be heavy in one specific area. Please note that the below is not a be-all and end-all; it’s just to give you a general idea. Feel free to tailor this to your situation. For example, if you live in the city and can walk or use public transport, you might not have a car payment. You may also have a higher housing payment than most, which may balance out with the lack of a car payment.

The percentages below are based on your take-home pay (aka after-tax income). Total percentages across the categories should equal 100%.

  • Housing (rent, mortgage, property taxes, HOA) 25-35%
  • Insurance (life, health, disability) 10-20%
  • Food (groceries, dining, food delivery) 10-15%
  • Transportation (car payment, gas, tolls, parking, Uber/Lyft, public transport) 10-15%
  • Utilities (gas, water, electricity, air/heat, internet, cell phone) 5-10%
  • Health/Medical (doctor visits, glasses, copays, prescriptions) 5-10%
  • Personal (clothing, grooming, gym membership) 5-10%
  • Fun (travel, entertainment, hobbies, home décor, streaming subscriptions) 5-10%
  • Savings (retirement plans, investing, loan payments) 10-20%
  • Miscellaneous (giving, education)

Pro tip: overall try to spend 50% on your needs (housing, food, utilities, etc.), 30% on your wants (fun, personal, giving) and 20% toward savings. Note that you may need to be more detailed in your analysis to build your budget this way (e.g., breaking out food into groceries for basic food vs a fancy dinner on a night out).

Now that you understand your expenses and have a better picture of your finances you can create your own spending guide. Give that money a purpose! Sticking with percentages for each category will help if you scale your life up due to a raise or increase in income. Don’t forget to tweak your guide as you go; it’s likely not going to be perfect so check how you’re tracking each month.


It’s flexible – don’t freak out; just adjust for other months. Your spending guidelines are like those floppy balloons you used to see in front of car dealerships (fun fact: they’re called Air Dancers).  Just like those, sometimes things go straight to plan and sometimes you must bend to make it work. If you continue to overspend, investigate areas/expenses you could reduce. Be honest -- what do you really need?


Money leftover? Best place to stick that is your savings bucket. Putting the extra toward savings can accelerate the pace at which you reach your goals whether that’s paying off debt sooner or being able to buy your next big spend sooner. Either way, you’re contributing toward a brighter life for your future self.

Need help setting your spending guide?