Ideal Budget – Creating a Complete Household Budget

Whether you are 15 years old or 80, middle school or PH.d level, just starting out or millionaire; budgeting can be just as mysterious. However, we offer guidelines to follow to help get your spending under control.

We bring a relatively simple, yet comprehensive approach to household budgets that will provide needed information and framework no matter where you are in life with a hyper focus on savings. Don’t wait until tomorrow. Your finances are too important. Get started today.


ThinkRich mindset understands that budgeting and tracking income and expenses provides the foundation and framework for financial freedom.  Whether you want to start your own business, save for college, or buy that dream car – successfully budgeting can help you down that path to achieve your goals. Budgeting is a ThinkRich long-term planning approach to financial freedom.


ThinkPoor mindsets believes tracking income and expenses is either a waste of time or is too hard to do for them.  ThinkPoor mindset is a short-term planning approach.

ThinkRich Budget Percentage Guidelines

Beginning with the basics, it is important to review the household budget categories and understand the items that fit within.  This way when you begin placing your expenses into ThinkRich categories you will have a full scope of the budget.

Note: Keep in mind, the specific percentages are not set in stone. This is a guide. Some will spend more or less in a given category. The goal here, however, is to set priorities. The main priority, of course, is savings.

Housing: 25%

  • Mortgage or Rent
  • Home Insurance or Renters Insurance
  • Property Taxes
  • Home Owners Association Fees
  • Home Improvement
  • Home Maintenance Repairs (1% of home value)

At 25%, housing represents the largest percent of the ThinkRich Budget and incorporates aspects of both standard costs and fluctuating costs.  We wanted to give a robust category that would capture all the of aspects of providing shelter for yourself and your loved ones.

Generally speaking, for this category, many other budget guides only focus on mortgage or rent payments, but there are several other expenses that come along with those mortgage or rent payments that need to be considered in order to have a complete budget.  It is important to consider all expenses related to housing when setting up your budget, home improvement and maintenance costs are often forgotten and end of coming out of the emergency fund.  We suggest baking these into your housing category and leave your emergency fund for truly unforeseen expenses.

When budgeting we can regard mortgage or rent payments, home or renters insurance payments, property tax and homeowners fees as standard fixed in nature.  While home improvements and home maintenance repairs can be considered fluctuating expenses in nature as the home improvement expenses can be adjusted throughout the year and the maintenance expenses likely would fluctuate month to month.

A fixed or standard expense is any cost that is not expected to change month over month for any given time period. For example, typically mortgage or rent payments are set in stone for the upcoming year, they could be considered “fixed” in nature and you could budget to those exact amounts.

A fluctuating expense is any cost that can change month to month during any given time period.  For example, home maintenance repairs; while we recommend budgeting 1% of home value for these expenses, in any given month the amount of money spent on your home could vary (Sprinkler system issue in June and an A/C issue in September; with no issues in any other month.)

Utilities: 10%

  • Water
  • Gas
  • Heat
  • Electricity
  • Phone
  • Cable
  • Internet
  • Streaming Service (Netflix, Hulu)

Our Utilities (10%) category has a mix of “essential” items and “luxury” items.  Luxury items may be different from household to household, but mainly cable and streaming services we consider luxury in nature while the remaining items are essential and should be standards in most households.  It’s OK to have the luxury items, we’re recommending that the overall category stays around 10% of household budget.

Transportation: 15%

  • Car Payment
  • Car Insurance
  • Public Transportation (bus, train, ride sharing)
  • Driver’s license Fee/Vehicle Registration
  • Parking Costs
  • Gas
  • Tickets
  • Maintenance on car

The percent of your total ideal household budget to allocate to transportation certainly can vary based on your geographic location.  Those people who live in cities that do not require a vehicle can bypass those expenses related to car payments, insurance, gas, etc. but it’s important to properly capture items such as public transportation and ride sharing.  Typically when living in the city housing costs are slightly higher, so this might offset the reduced percentage needed to be allocated to this category.

Healthcare: 5%

Food (groceries/dining in): 10%

  • Groceries, household items, pet related

Savings/Investments Strategy: 14%

  1. Long-Term Retirement Savings (401K, IRA, etc.): 10% (Taken before applying %s)
  2. Short-Term Emergency Fund (covers 12 months) 10%
  3. Debt Payments: 10%
  4. Mid-Term (College Fund and Investing; 5 years – 60 years) 10%

Charitable Giving: 5%

Entertainment/Recreation: 5%

  • Dining out
  • Leisure/Hobbies (Theme parks, Movies, Sporting events)
  • Babysitters
  • Vacations

Clothing: 3%

Misc. Personal: 3%


Average Household Expenses by Major Category

household expenses

It is important to note that the numbers reported by the Bureau of Labor Statistics capture estimates on how people are actually spending their money and it may or may not differ from what is presented in an ideal household budget.


How do you budget your expenses? What are your thoughts on household budgets? Leave a comment below!  ⇓⇓⇓


Certified Public Accountant, Masters of Business Administration, Masters of Science in Accounting, Chartered Global Management Accountant, Family Man

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