2I know this will sound bad but I had not sat down and added up all my monthly bills in at least 3 years, the reason being is that I can pay all of my monthly living expenses (including rent) in one paycheck.

You see, a long time ago when I was a young single mom in a low paying job and I was receiving spotty child support payments, I lived paycheck-to-paycheck.  Any small emergency like my car needing repairs caused me to be in debt.  I also made foolish financial mistakes like buying a car I could not afford.

Eventually, I went back to college and earned two degrees, thereby, increasing my earning potential.  Each time, I would get promoted and change jobs, I would live on less than what I earned.  I do not live in a fancy neighborhood nor drive a fancy car.  In fact, if you think about it, my living expenses is equal to 50% of my monthly take home pay.

According to the article How to Allocate Your Salary by Linda Ray, below is how my salary should be divided:

Savings
10%

Home (rent or mortgage and the utilities)
40%

Food and Clothing (groceries, takeout, restaurants & clothing)
15%

Debt (credit card bills and other debt such as student loans)
10%

Transportation (car payments and insurance, gas & maintenance)
15%

Entertainment (incl drinks after work, concerts, sports gear, vacation & movies)
5%

What I realized that I am only meeting 75% of my personal savings goals (this figure excludes 401K and Retirement accounts since it is automatically deducted from my check).

Here’s my Savings Goals: (Increase my monthly savings by $250)

1. Increase my personal savings to 10%
2. Set up a Dental Savings Acct (I have no dental insurance) – goal $1,200
3. Set up a Laptop Savings Acct – goal $600

I have a savings account with Capital One 360 (formerly ING) in which I have already set up an automatic savings for my new saving goals.  If you look at the picture above, it was super easy for me to create a goal, calculate how long it would take to reach my goals and set up an automatic deduction from my brick-n-motar checking account at my credit union.

My ultimate goal for the Dental Savings is to eventually increase it to $4,000 but I know I will be needing another new laptop soon.  So, I have about 60% of the $250 going towards the laptop and the other 40% going towards the Dental Savings.  As soon as I achieve my laptop goal , I will then move 40% into the Dental Savings.

{ 7 comments }

  • JustD April 4, 2013, 11:19

    I like your plan and the article. I’ve never stopped to put my budget into categories and I’m curious to use this format to see if/where my money is being used. Also, Food and Clothing is 20% – 15% food, 5% clothing. Your totals only add up to 95%… or maybe that’s just the rainy-day strategy? 😉

    • admin April 5, 2013, 07:55

      I am glad you enjoyed the red. You know that math was not my best subject in school. 🙂

  • grace April 4, 2013, 16:18

    thanks for sharing this. i like that you are saving for your laptop. i think I need to start categorizing my budget too. Useful information

    • admin April 5, 2013, 07:53

      Grace, I am glad enjoyed it. When we were kids we saved for what we wanted. As adults, we tend to buy first and pay later which is kinda backwards.

  • Gee April 5, 2013, 09:58

    Good post. My relative is in the same boat as you were, she did go to college but she has never really advanced to a pay rate like some of her co-workers. She just bought a new car but she also has her home to pay for, she relies on the child support to pay for that part as well as the other stuff they need.

    • admin April 5, 2013, 17:45

      Your relative will eventually become frustrated and turn things around. Most people do not think about money, they just spend it without thought. It’s sitting down and crunching number and thinking…it’s the first step to getting individuals on the right path.

  • Margarita April 8, 2013, 07:45

    Love your plan…I really enjoyed when i first started to read your blog the end of the month savings where your goals where met…I think you an account for a new purse…I actually just started to do the same and need to get ING to have my paycheck go into different accounts so I don’t feel guilty if I want to splurge