Guidelines to handle your income the right way
Most of the people wonder how to manage their income as in how much they should spend and how much should be allocated to savings. Even though each individual has a different situation, it would be best if you have a basic reference to guide you create the personal budget.
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Below mentioned guidelines will help all the people irrespective of their age to manage their income.
Managing you fund
Savings- Around 15 to 20 percent of your income should be kept aside for savings. This is on a higher side, but saving is quite critical to achieving financial success and being able to save a sizeable amount when you are still young will help you greatly in developing the habit. As you grow, you will keep earning more in your career and this habit will seem easier for you.
Housing- Around 25 to 35 percent of your income should be kept aside for housing. Few people will be living in the area wherein the housing costs will be quite high, and then you need to shell out a large part of your income as housing expense.
Automobile- Around 5 to 10 percent of your income will be allocated towards the costs of the car. Actually, it is not a good investment as they keep depreciating in their value with the passage of time. Hence you need to be quite conservative while spending on cars.
Insurance and health care- Around 5 to 15 percent of your income be kept aside to meet the healthcare costs. Unfortunately, this is one of the biggest and variable categories. Many people will be thinking it is a waste of money to keep aside in this category as you might not fall sick every year. But saving for insurance and healthcare will help you in unpredictable circumstances.
Entertainment and utilities- Around 5 to 10 percent of your income should be allocated each to these categories. Utilities are our basic necessities. Keep aside for entertainment as you need to enjoy life without feeling guilty about the expense of travel, movies, etc.