What % of your income goes to housing, saving and splurging?

Posted by Expert Panel

Experts love giving advice—but how can you be sure they practice what they preach? Even better than telling you what your budget allocation should be is revealing what they do with their own money. To that end, we asked our Woman2Woman experts to lay bare their own personal budget guidelines and monthly expenditures, warts and all:

Cindy Wilson: Over a third of my budget goes towards housing—partly because I live in one of the least affordable housing markets in the country! It's a rule of thumb that you can afford to buy a house equivalent to roughly 2.6 years of your household income. And the median home in Los Angeles costs the equivalent of 9.6 years of the median household income.1 Another reason I spend more than the recommended 30% on housing is that I'm paying rent on stables for my horses—but it's worth it. Every weekend is like a vacation weekend when I have a chance to go on a beautiful trail ride with friends!

Cindy Wilson's budget breakdown piechart: Savings 14%, Housing 28%, Discretionary 20%, Food 16%, Clothing 4%, Transportation 15%, Medical 3%

Shelly Eweka: My husband and I are at a point where we both contribute the maximum to our retirement accounts: Employer plans, IRAs and HSAs, everything we can. We spend only a tenth of our household income on rent (a temporary arrangement).

Shelly Eweka's budget breakdown piechart: Retirement savings 26%, Housing 10%, Discretionary 20%, Food and bills 20%, Charitable giving 11%, Transportation 13%

Hakyun Morrissey: It took a lot of planning and focus to get us to the point where my husband and I can save almost a third of our household income. Saving has always been a non-negotiable: We have lots of loved ones that are dependent on us financially and we're on our way to being able to support them.

I remember the day when, newly married, more than 65% of our income was eaten up by our first condo in Boston. Even then, we found a way to free up 5% of our income for retirement saving and 2% to build up our emergency cash. Friends would go out to dinner but we'd eat at home and meet up with them afterwards. We budgeted $150 for fun—literally withdrew $150 each month from the bank so that we’d spend just that; if we ran out, it was done.

I'm grateful to my husband for supporting our budget. I’m grateful for family and friends who supported our decision. And I'm especially grateful to myself for having the foresight to plan for our future. While it's important to live in the moment, it's just as important to plan for the future. I can't stress enough, pay yourself first. Build that mindset into your budget, regardless how tight it may be right now. Your future self will thank you for it.

Hakyun Morrissey's budget breakdown piechart: Savings 32%, Housing 22%, Children 10%, Discretionary 10%, Food 12%, Charitable giving 3%, Transportation 6%, Medical 3%, Clothing 2%

Alicia Waltenberger: My budget gets really out of whack as the holidays approach. Because I've already tapped out my pretax savings accounts—403(b), IRAs and HSA—my take-home pay is always larger in November and December, leaving me with more money to spend on gifts. Moral of the story: The 50/30/20 rule is elastic, and it's reasonable (desirable, even) to save more than 20% of your income during certain months of the year.

Alicia Waltenberger's budget breakdown piechart: Savings 23%, Housing 22%, Discretionary 22%, Food 16%, Charitable giving 10%, Transportation 5%, Medical 2%

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"Where the House-Price-to-Income Ratio Is Most Out of Whack," Citylab.com, May 2018, https://www.citylab.com/equity/2018/05/where-the-house-price-to-income-ratio-is-most-out-of-whack/561404/Opens in a new window

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December 27, 2018