Money Management

Dave Ramsey Recommended Household Budget Percentages (+ How to Determine Your Own)

Dave Ramsey Household Budget Percentages
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One thing you can say about Dave Ramsey is that 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?

And what does his ideal household budget look like?

Let’s find out…

Dave Ramsey’s Recommended Household Budget Percentages

Dave Ramsey's Household Budget Percentages Pie Chart

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

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

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

  • Giving — Ramsey recommends giving 10% of your monthly income to worthy causes.
  • Saving — Saving 10% of your income for retirement, which ideally is within a 401(k) or IRA.
  • Food — Includes both grocery shopping and eating out.
  • Utilities — Cell phone, cable, internet, gas, and electricity.
  • Housing costs — Rent or mortgage payment, along with property tax, home or renters insurance, home maintenance, HOA fees, and PMI.
  • Transportation — Any and all transportation costs, including public transportation, car insurance, oil changes, car payment, gas, DMV fees, and parking.
  • Health — Medical and health care bills (not including health insurance premiums) such as co-pays for doctor visits, prescriptions, and dental care.
  • InsuranceLife insurance, health insurance, and disability insurance. Auto insurance and home insurance is placed within transportation and housing categories. 
  • Personal spending — Personal care, haircuts, Amazon purchases, clothes, shoes, 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 personal debt. Ramsey recommends putting as much as possible towards your non-mortgage debt, such as student loan payments, personal loans, 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 for retirement 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, such as school supplies if you have children or alimony if you’re obligated to pay it.

Using myself as an example: I prefer to save much more than 10% 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 and have two paid-off cars. 

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.

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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, and have the app automatically download the past transactions. Dave Ramsey has the EveryDollar budgeting app. The app itself has great reviews. However, in order to sync your transactions automatically, you have to pay for the pro version (which costs $99 a year). 

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

Free Budgeting App Recommendation: Rocket Money Budget & Bill Tracker. Rocket Money, which is both a budget tracker and a bill cutting service, has a very clean and user-friendly budgeting app. The budgeting app is 100% free, syncs your transaction automatically, and also allows you to track upcoming bills. Learn more about how it works in our Rocket Money review.

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% of my gross monthly income
  • Become debt free in 18 months
  • Reduce my cost of living to 25% 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:

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

From there, you’ll create a zero-based budget. That means every dollar earned within that timeframe 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, three 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.

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

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

The Envelope Budgeting Method

If you’re looking to save money — as in drastically reducing your expenses — the budgeting method I would try is the envelope system, also known as the envelope budgeting method. 

The envelop system is a cash-only budgeting method. How it works is you:

  • Determine your household income
  • Decide on a budget amount for each category
  • Create envelopes for each budgeting category
  • Stuff your envelopes with cash according to their budgeted amount
  • Spend only cash, knowing that you can only spend what’s inside your envelopes

Yes, this budgeting method is a bit more tedious. However, it really works to change behavior. If that sounds like too much, consider just using the envelope system for the two or three budgeting categories that always seem to get out of whack. 

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.

R.J. Weiss
R.J. Weiss is the founder and editor of The Ways To Wealth, a Certified Financial Planner™, husband and father of three. He's spent the last 10+ years writing about personal finance and has been featured in Forbes, Bloomberg, MSN Money, and other publications.


  1. Is this referring to net salary or gross?

    1. Hi Michelle,

      It’s net, or total take home pay after tax.

      1. That’s not confusing.

  2. were does banking fees go?

    1. I would insert those into the misc category.

  3. Hey R.J,

    Perhaps I’m mistaken, but I thought the recommended percentage for retirement saving was 15%, not 10%? Of course, that wouldn’t include additional savings you may be putting away each month. Thanks!

    1. You’re right! Not sure when they were changed. Will shortly update the article and graphic.

      Thanks Molly!

  4. Hey RJ,

    I’m also self-employed. How do you account for taxes in your budget?

    1. I’d base my budget on my net take-home pay.

      What I do specifically is take a generous amount off the top for taxes from my business checking account before I pay myself, e.g. between 25 and 30%. That money then sits in a separate savings account just for taxes.

      After finalizing taxes for the year, any money that’s left over in that tax account I consider a bonus.

  5. I am wondering how the recommended household budget percentages change for those of us who are already retired. My husband and I are recently retired and are attempting to live within our SS and pension incomes, only using our t-retirement savings for extras like bigger travel plans. For example, we do not have a house payment, so that recommended 25% budget does not apply. However, now that we are 65, we pay out of pocket for additional healthcare that Medicare does not cover. Are there recommended percentages or do we just need to figure that out ourselves?

    1. Recommended budgeting percentages are ideal for the typical household that still has a house/rent payment, car payments, etc…

      As you said, your best bet is to figure out a budget for yourself best on your situation. A good start is to analyze where you’re spending now versus how much income you have coming in.

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