Back to Basics: Creating a Personal Budget

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The “B” word is reentering the economic fray.

Budget is a top search on Google, as debt-ridden Americans frantically hunt down ways to create a manageable personal budget.  How much to spend on needs versus wants ? How to make the most of your hard-earned money? If you are in serious debt, consult a credit counselor who can help devise a more strategic pay-off plan and budget for you.

Everybody else, consider these percentage guidelines below.  MainStreet kept in mind that the average household income in this country is roughly $46,000 a year. After taxes and deductions for a health care plan, social security, etc., the monthly take-home pay ends up being around $2,500, give or take.

Bear in mind that this is just a general guideline. In some cases (hopefully) you won’t have any credit card debt, leaving you with 30% of your take-home pay to play with and sprinkle throughout other areas of your life. 

RETIREMENT – 10%
We often neglect to properly save for retirement because it feels like there’s plenty of time to save later, especially when living paycheck to paycheck now. Remember: Social Security is not all it was cut out to be and the younger you are, the less likely you will get much, if any, money from the government. Workers in their 20s should be automatically investing at least up to 10% of their paychecks in their employer’s 401(k) program.  For everyone else, store away at least the minimum amount your company will match. Believe it or not – 60% of 401(k) participants do not contribute enough to obtain a full company match. That’s free money left on the table!  Additionally, consider opening an individual retirement account or IRA at your local bank – either a ROTH or a traditional plan.  Which one you choose depends on your income level and what tax benefits you’d prefer.