Thursday, December 1, 2011

The Budget Chart

The Life Pie
Life - 25
Debt - 15
Housing - 35
Saving - 10
Transportation - 15

What do those numbers mean? This is a 100 % breakdown of how your net income should be spent.

The percentages are:
  • 35% for housing (mortgage/taxes, rent, utilities, insurance, maintenance),
  • 15% for transportation (car payments, gas, repairs, insurance, parking, transit),
  • 10% for saving (long-term saving),
  • 15% for debt repayment, and
  • 25% for life (everything from groceries to entertainment, medical to childcare… In fact, everything that’s not in the other four categories.)
I have just completely revised my budget using
Gail Vaz-Oxlade's Budget Chart.  It really helped me to put things into perspective.

Check it and fool around with it.  You will find as you input numbers, the percentages to the right of the graph begin to move.  At the end you will have a true picture of where your money is ending up.

If you find that the percentages add up to more than 100%, then you are over spending, and your bank account is in the red.

Here is my chart worked out:

Life - 21.44%
Debt - 20.52%
Housing -   28.36%
Transportation -  24.22%
Savings - 5.46%

My transportation category is high.  Sigh.... My route to and from work adds up to 121 km. I am in a car lease, and I have to shop around for lower car insurance.

My debt category is high, but it is my goal to be debt free within 30 months.

My savings is low, but the above explains that.  Thankfully I pay 5% of my pre-tax dollars to RRSPs.  Each year when I have hit my CPP and EI max in October, I increased my contributions to 7.5%.

What I loved about Gail's chart was that it enabled me to find a little of income for savings. It showed me that when I see exactly where my funds are going, overdraft is no longer required.

I have worked out a chart for the hubby and forwarded it to him.  I am hoping that he will buy into it. We have never had a late payment, but quite honestly we can do so much better at hammering away at our debt.

Stay tuned...

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