We’ve all seen those graphs and charts that tell us how much of our hard-earned money we are supposed to be spending in each category of the spending plan. Most of those, however, are very dated and/or don’t apply to our area. Here is a plan that is very current and for Southern California. The following guidelines are for the typical family of four. See how your expenses compare: Housing 20% Taxes 16% Food 12% Transportation 10% Retirement/Investments 10% Insurances 7% Utilities 6% Entertainment 4% Short-term savings 4% Other 11%
Short-Term savings is into the savings account and is for things like when the hot water heater goes out, or the annual real estate taxes are due, etc.
The ‘other’ category is for all things that aren’t in the particular other categories. This includes things like clothes, grooming, hobbies, vacations, etc.
Source: Linda Barlow, CFP
For other financial articles or tax tips, please visit Women Investing in Security and Education (WISE) http://wise-investors.org.