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The Ideal Budget

I was poking around CNN Money’s Money 101 “classes” today when I stumbled upon a budget calculator [3] they had devised. They classified an individual’s five most significant budget categories and specified what they felt was an ideal spend as a percentage of your salary. The categories and recommended ideal spend percentages were:

What’s interesting is how they broke down all spending into those categories which vary in “width.” Insurance has a mere six subcategories (Life, Health, Disability, Auto, Homeowner and Other) whereas Living Expenses has a whopping sixteen categories ranging from gasoline to food to private school tuition – I wonder how they arrived at those subcategories and those groupings. As a sidebar, most interesting was the grouping of mortgage and debt… including credit card debt. I can understand grouping debt together but wouldn’t you at least, symbolically, split up a mortgage loan and a credit card debt?

One positive? The consideration that 15% of your gross salary should go towards savings and investment. I’ve been a little derelict in my finances, partially because my laziness has been subsidized by the income from this blog, and I don’t specifically “save” any of my income outside of a 401(k) pre-tax deduction. While I don’t explicitly save, everything outside of a few thousand dollars is sent off to my Emigrant Direct account for safekeeping. Once my financial situation is more stable (after my new job’s direct deposits start, my billpays have moved from my former employer’s credit union to my new Bank of America account, etc.) I plan on opening an account with Vanguard and investing excess (savings greater than our emergency fund needs) funds in some index fund.

As for the rest of the numbers, I’m lower on Housing & Debt, Taxes, and Living Expenses and I’m higher on Savings & Investment (which is good) and Insurance (which isn’t that surprising for someone who drives a car and is under 30 and has health insurance). So… how do your numbers compare?