LearnVest offers a simple budgeting rule to apply instantly to your household. Your take-home pay is allocated among three categories: essentials [50%], priorities [20%], and lifestyle choices [30%].
Laura Shin writes (excerpt):
The 50/20/30 Rule can be easy because instead of telling you how to break down your budget across 20 or more different categories (who could possibly keep track of that?), it splits everything into three main categories:
1. Essential Expenses
No more than 50% of your take-home pay should go toward Essential Expenses [housing, transportation, utilities and groceries] . . . .
2. Financial Priorities
At least 20% of your take-home pay should go to Financial Priorities [retirement contributions, savings contributions and debt payments, if you have debt] . . . .
3. Lifestyle Choices
No more than 30% of your take-home pay should go to Lifestyle Choices [cable, internet and phone plans, charitable giving, childcare, entertainment, gym fees, hobbies, pets, personal care, restaurants, bars, shopping and other miscellaneous expenses] . . . .