“Dave Ramsey’s suggests paying off the mortgage early, which is understandable for saving on interest payments,” Kayikchyan said. Housing is another large budget category, and according to the Ramsey Solutions article, you should not allot more than 25% of post-tax income on it. “The utilities category discussed gives some averages and not percentages, but the real cost for utilities as we know depends on where you live in the nation,” Kayikchyan said. Given that utility costs are so hugely dependent on your location, it’s hard to know exactly how much of your budget to set aside for this cost. $695 a year (about $58 a month) on water and other public services $1,551 a year (about $129 a month) on electricity $447 a year (about $37 a month) on natural gas This will be a good strategy for someone who is using food or grocery delivery services.” UtilitiesĪccording to the math offered in the Ramsey Solutions blog, Americans spend the following on utilities: But in reality, preparing meals at home versus eating out will save you some good money. For the food category, buying in bulk, couponing and chasing deals is one way to save. “Food, along with housing and transportation, is considered the largest item in the household budget. “While there are no set percentages offered here, the article gives some national averages of what Americans spend on groceries each month: singles age 19-50 spend $314 to $337, couples age 19-50 spend around $685 and families of four spend around $971,” Kayikchyan said. The next budget category discussed in the Ramsey Solutions article is food, and surely we all need that! But food prices have risen at the highest rate we’ve seen in decades. “While this can sound a little controversial and opposed to the ‘pay yourself first’ budgeting method, the article emphasizes giving as a great act and being good for everyone, and recommends giving 10% of income,” Kayikchyan said. In many cases the actively managed mutual funds come with high and unnecessary fees.”Ĭharity is an important part of the human experience, and many people want to allot for it in their budgets. I suggest considering low-cost and well-diversified index funds as an alternative. He offers that good growth stock mutual funds are proven ways to build wealth and retire a millionaire the right way. Dave Ramsey’s investment philosophy is all about investing in good growth stock mutual funds. “Once the debt is paid off and a fully funded emergency fund is saved, building wealth is the next saving goal and the article suggests to invest 15% of gross income. “One surprising data article points out that the average American saves around 9% of income and it should not be the set number for everyone,” Kayikchyan said. “When debt is paid off, having a fully funded emergency fund is important, which is 3 to 6 months of expenses to protect you against bigger emergencies.”įun: Check Your $2 Bills - They Could Be Worth Upwards of $4,500Īnother reason to save money is, as the article discusses, for necessary big purchases. “I suggest doubling the starter emergency fund amount to $2,000,” Kayikchyan said. Ramsey’s article recommends starting out with baby steps, and putting aside $1,000 in a savings account ASAP. According to a recent GOBankingRates survey, nearly half have less than $500 in savings. Nobody can deny the power of savings, and yet so few Americans have enough in this department. Read on for a clearer sense of how this budgeting strategy works and what alternatives there may be. In this article, GOBankingRates examines the Ramsey approach to percentage budgeting and pulls insights from fellow personal finance expert, Ohan Kayikchyan, CFP, founder of Ohan The Money Doctor. Learn: How To Get Cash Back on Your Everyday Purchases Grant Cardone Says Passive Income Is the Key To Building Wealth: Here’s His No. The Ramsey team explains how to organize guidelines for setting a budget in precise detail, using percentages (when available) of your income. Leveraging wisdom from personal finance expert Dave Ramsey, Ramsey Solutions has provided a blueprint for budgeting. Budgeting is essential for everyone who wants to have a healthy financial life, but it can be strangely difficult to do if you’re not sure how the math behind it works.
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