Have you ever busted your budget? In other words, have you ever had an expense so large it took a significant portion of your paycheck each month? You may have found it difficult to pay bills. Or, after paying bills, you might have not had any money left for other expenses or entertainment.
Outside of emergencies, or unexpected expenses, these budget busters can cause big problems. Crown Financial Ministries refers to them as “areas that can result in financial disaster.”
Most expensive areas of a budget
So, what are the largest spending areas of a typical budget that can lead to the most problems? According to Crown, the three areas that have the largest monthly allocation for budgets are housing, food and transportation or automobiles.
Crown recommends not spending more than the below percentages (family of four example) of Net Spending Income (NSI) for these categories. NSI is defined as money available after tithing and paying taxes.
- Housing (includes mortgage, taxes, insurance, utilities, phone and maintenance): 38% of NSI
- Food: 12% of NSI
- Transportation: 15% of NSI
I do realize there are a lot of spending guidelines out there. Dave Ramsey has a set of his own too. But I like how Crown guides people to manage money after tithe and taxes. The tithe assumes you’re giving to God first before spending in any other area. After this gift has been made, it’s up to you to allocate your spending to other areas and manage them wisely.
Busting your budget with housing, food and automobile can make things quite uncomfortable. But time and time again, people are tempted and give into purchasing more house and car than they can afford. And food is always a hard one to wrestle with as the trip to the local grocery store can get quite expensive week after week.
Benefits of a balanced budget
Keeping spending in-line for these areas can definitely help in providing a more balanced budget. And a more balanced budget definitely provides benefits. Just look at a few examples below:
- Reduction of stress when paying bills or talking about money with your spouse
- More money to spend in other areas such as entertainment
- More money to direct towards financial goals such as paying off debt or savings
- More freedom to give when you feel called to do so, or when others need assistance
- Get out of debt sooner by paying off a manageable mortgage
I’m sure there are many more benefits, but again, these are just some examples. So how do you keep spending under control across these three areas and avoid a budget bust?
New series: budget busters – how to save money and control spending
Well, stay tuned because I’m going to provide a 3 post series on avoiding a budget bust for food, housing and transportation. In each post I’ll provide ideas to help you save money and control spending. Of course, it will be up to you to put some of these ideas in action. Or perhaps, some of these ideas will stimulate your creative thinking and help you come up with even more ideas.
Have you ever experienced a budget bust? If so, how did you overcome it?