One thing you can say about Dave Ramsey is he keeps things simple.

His baby steps are easy to grasp. As are his other rules, such as how much to spend on a car. (Answer: the total value of your vehicles shouldn’t exceed half of your income.)

So, what does Dave say about recommended household budget percentages? What does his ideal household budget look like?

Let’s find out…

Dave Ramsey’s Recommended Household Budget Percentages

Ramsey’s 11 budget categories, along with the percentages are:

  • Giving — 10 percent
  • Saving — 10 percent
  • Food — 10 to 15 percent
  • Utilities — 5 to 10 percent
  • Housing costs — 25 percent
  • Transportation — 10 percent
  • Health — 5 to 10 percent
  • Insurance — 10 to 25 percent
  • Recreation — 5 to 10 percent
  • Personal spending — 5 to 10 percent
  • Miscellaneous — 5 to 10 percent

In visual form, which you can save via Pinterest, you get:

Dave Ramsey Recommended Household Budget Percentages. These budget categories from Dave Ramsey are perfect for beginners to get started. Plus, learn other simple budget category ideas to make your budget successful. #budget #moneymanagement #daveramsey #savemoney #personalfinance


Here’s a breakdown of each category based on Dave Ramsey’s advice:

  • Giving — Ramsey recommends giving 10 percent of your monthly income to worthy causes.
  • Saving — Saving 10 percent of your income for retirement.
  • Food — Includes both grocery shopping and eating out.
  • Utilities — Cell phone, cable, internet, gas, and electricity.
  • Housing costs — Rent or mortgage, along with tax, insurance, HOA fees, and PMI.
  • Transportation — Any and all transportation costs including public transportation, car payment, gas, maintenance, and parking.
  • Health — Medical and health care bills (not including health insurance premiums).
  • Insurance — Life insurance, health insurance, and auto insurance. Renters or home insurance is placed in housing costs.
  • Recreation — Any lifestyle expenses, such as gym memberships or kids’ activities, as well as entertainment expenses like concert tickets and travel.
  • Personal spending — Clothes, shoes, hair care, home furnishings, home decor, etc.
  • Miscellaneous — The “stuff you forgot to budget for” category.

What about debt? One category missing from the list above is debt. Ramsey recommends putting as much as possible towards your non-mortgage debt, such as student loan payments or credit card bills. That requires minimizing your expenses in other categories (as well as making more money) and putting everything you can into paying down your debt. Also, according to Ramsey, you shouldn’t start saving money until you have a fully-funded three-month emergency fund.

Another note is that these spending categories are just one way to organize your budget. There are other budgeting categories you may want to include, and other ways you may want to classify your expenses. And some people’s expenses just might not fit within these guidelines.

Using myself as an example: I prefer to save much more than 10 percent of my income. As I’m self-employed, my health insurance costs are very high. And with a child in preschool, so are my education costs. On the other hand, my transportation expenses are much lower than average since I work from home.

The specifics of your personal financial situation don’t have to match up perfectly with this chart. What’s important is developing an individualized budget that works for you and your family.

Related: How to Set Financial Goals That Actually Make You Happy (Free Printable Workbook)

Dave Ramsey’s Household Budget Percentages Analysis

The idea is to use these budgeting categories as a way to analyze your current monthly budget.

As such, the first step to making these budgeting categories useful is to compare them with your actual current spending. The emphasis is on actual because research shows there is a vast difference between what we say and what we do.

This is called social desirability bias. It means that we tend to answer questions about ourselves in ways that are socially desirable. A fun exercise to see how this bias works in practice is to estimate your current monthly expenses, then compare that estimate to the actual data. For a quicker experiment, try just one category. For example, compare what you think you spent on eating out last month to what you actually spent at restaurants.

Simple ways to get this data include:

  1. Look at last month’s credit card statement(s) and insert the data into a good budget template.
  2. Use a good, free budgeting app like Mint or Personal Capital and have the app automatically download the past transactions.

The goal is to get the actual results, showing exactly what you spent down to the dollar.

How to Analyze Your Monthly Budget (and Create Your Own)

Once you have this data, you can then use it to make good financial decisions. Use these questions as a starting point:

  • Which areas of my current budget are within the recommended guidelines?
  • Which areas of my current budget are outside the guidelines?
  • In which categories are my current spending habits fixed?
  • In which categories is my spending flexible or variable?
  • Will any categories increase in the future, and why?
  • Will any categories decrease, and how?
  • Which categories do I want to increase?
  • Which categories do I want to decrease?

If you take the time to answer these questions, make sure it’s not wasted effort. Follow through by identifying three to five goals you want to achieve based on your insights.

Examples include:

  • Lower my eating-out costs to $75 per month
  • Save at least 10 percent of my gross monthly income
  • Become debt free in 18 months
  • Reduce my cost of living to 25 percent of my total take-home pay

Dave Ramsey’s Recommended Budgeting System

Having a budget is one thing, but sticking to a budget is a whole different ballgame. That’s where Dave Ramsey’s recommended budgeting system comes into play.

To help with the discipline required, Ramsey suggests using an allocated spending plan. To summarize, an allocated spending plan is a budget that allocates expenses by pay period.

For example, if you’re paid on the 1st and 15th of each month, you’ll have a budget for each period:

  • 1st through 14th of the month
  • 15th through the end of the month

From there, you’ll create a zero-based budget. That means every dollar earned within that time frame will be allocated. There are some finer details to this method, so use this step-by-step guide to begin.

Other Budgeting Methods

The allocated spending plan works well to reduce your household living expenses. But it can be quite tedious — especially if it’s your first time budgeting.

If that’s the case, two simpler budgeting methods include:

The reverse budgeting method

To put it into simple terms, reverse budgeting means paying yourself first. You do this so that you can fund the most important goals you have in your life. After that, any money that’s left over once your bills are paid can be spent on whatever you please.

Click here for a complete guide on reverse budgeting.

The 50-20-30 budgeting method

The 50/20/30 method is a popular budgeting tool that allows your finances to be easily broken down into three different sections.

The method recommends the following:

  • Use 50 percent of the money you earn for necessary expenses, such as housing and transportation
  • Use 20 percent of your income to gain financial traction
  • Lastly, 30 percent of your income can be used on anything you want

Click here for a complete guide on the 50-20-30 budget.


Summary: Household Budget Percentages

We all know that personal budgeting gets a bad rap. But if you want to improve your financial situation or need money ASAP, it’s one of the most important things you can do.

Budgets tell your money where to go. Done right, they give you more freedom with your personal finances, not less. 

That’s because they give you the power to decide ahead of time what’s important for you. A good budget will help you better allocate your money towards both your short-term and long-term goals, help you identify areas where you can cut wasteful and unnecessary spending, and help ensure you’re saving and investing for a stable and prosperous future.

It’s for this reason that goal-setting must be done before creating a budget. It gives you the purpose to create a budget that maximizes your financial life. To learn more about goal-setting, grab the free workbook below: