Dave Ramsey’s Recommended Percentages for Today’s Budgeting Households

Mr. Ramsey’s thoughts and teachings about debt and personal finance hold a lot of controversies. Specifically, Dave Ramsey’s recommended percentages for budgeting.

He has been helping thousands of people get out of debt for decades now yet some feel his theories are not quite modern enough for today’s society.

Dave Ramsey is the author of The Total Money Makeover and founder or Ramsey Solutions and Financial Peace University.

He is also the creator of the wildly popular baby steps.

These budget categories and percentages are taken from my Total Money Makeover book from 2009.

Here are the budget categories and Dave Ramsey’s recommended percentages.

  • Giving 10-15%
  • Savings 5-10%
  • Housing 25-35%
  • Utilities 5-10%
  • Food 5-15%
  • Transportation 10-15%
  • Clothing 2-7%
  • Medical/ Health 5-10%
  • Personal Spending 5-10%
  • Recreation 5-10%
  • Debt 5-10%
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How to Buget Like Dave Ramsey

Setting up a budget is daunting for so many. How in the world do you even start? Where does my money go and what budgeting categories do I even need?

Even though you may not be Dave’s biggest fan, his program works.

Everyone needs a budget. And Dave has set up a foolproof program to help you get started. So…let’s get started and learn how to budget like Dave Ramsey.

Dave Ramsey’s Budget Percentages

Giving

Because this book is compiled by someone who believes very strongly in his religious beliefs, you will find giving and tithing to be first and foremost.

Dave believes that before anything else, you give. If you are not a church-going person, you can give to charities or put this toward something else that might need more of your salary.

Giving doesn’t have to be done monetarily. But giving is an important part of this process.

Savings

Savings needs to happen. Whether you are saving for retirement, a new car, an emergency fund, or Christmas, we all need to save.

We all need to be prepared for the future. The time of spending willy billy int he days of our youth has ended. Adulting is hard, I know. But its time to save for that rainy day.

Housing

The housing category not only covers rent or mortgage, but it also covers all decor items and repairs to where you live.

If the faucet is leaking and you need a plumber, this is part of housing costs – unless its an emergency, then you can take it out of savings.

Homeowner’s insurance would be in this category as well as any HOA dues you might have.

Utilities

Utilities might include everything from electricity, natural gas, phone, and cable. Be selective here, though. it seems most agree that TV is a utility yet subscriptions might be considered recreational.

I would suggest adding it to wherever it fits best for you. Utilities are also an area where its fairly easy to reduce your usage and in return reduce your monthly bill. Electricity can be reduced with a minor amount of effort.

Food

Food is another category that can be easily reduced with some planning. This budget category would include not only groceries but restaurants, take out, fast food, and morning coffee and muffin.

Cooking at home more, packing your lunch, and making a coffee to go will all reduce the spending. Also, reducing food budgets is not very hard to do.

It will take a bit of effort and a lot more planning at first, but once you get the hang of it, you will get in a nice flow.

Transportation

Transportation includes everything from car payments to insurance. Oil changes, routine maintenance, and repairs all fall into this category.

Make sure your car payment is very low or nonexistent so the rest of the finances fall into the right percentages.

This is an area where many have too much car and it cuts into the earnings much more than it should.

Clothing

Clothing is another area where the percentage can lean toward the lower end. Not many of us need to shop every month for clothes.

I’m sure most of us could go for a very long time wearing the clothes we already have in our closet. Unless your children are going through a growth spurt or you have had a career change, I bet your clothes are just fine.

Health

This is one area I’m uneasy about. I m not sure what this is for. I lean toward over the counter medications, copays, and prescriptions.

I can’t imagine this would also include health insurance with the prices that people and families are paying now. We will just assume health insurance has already been taken out of the pay.

Personal Spending

Personal spending is just that. it’s an amount of money each month that you can spend on anything that you want.

For some, it might be a Friday coffee treat or a pedicure. For others, it could be a beef and cheddar sandwich with a side of tater tots and a motorcycle magazine.

This category gives you a little bit of freedom to do whatever you want.

Recreation

The recreation category is all about fun. Movies, date night, baseball games, golf…whatever you want to spend money on have a good time.

This could even be used for a new board game for family game night or seasons passes to the zoo. You can also add subscriptions to this like the NFL Game Pass if you are a football lover.

Or chocolate of the month club if that’s a thing.

Debt

Debt is the category that you might us if you have any debt. Although, if you do have any type of debt, I would trim the rest of these categories as much as possible to put this fire out real quick.

If you notice, many of these are ranges so coming up with a definitive plan can be a lot of math. But let’s try with Dave Ramsey’s recommended percentages :

If someone is bringing home $2500 a month after all taxes are taken out here’s what those numbers look like.

  • Giving 10%……..$250
  • Savings 5%……$125
  • Housing 25%…..$625
  • Transportation 10%……..$250
  • Food 10%………$250
  • Utilities 5%……$125
  • Medical/ Health 10%…….$250
  • Clothing 5%…..$125
  • Recreation 5%……$125
  • Personal 5%…….$125
  • Debt 10%…..4250

This is from someone bringing home $2500 per month after taxes. But I am not sure if this is also after health insurance has been taken out.

We are looking at a yearly salary of about $36,000 if the health insurance has not been paid yet.

The issues here are in the numbers. Some of these are a little low. $625 a month for housing is tough unless its a dual-income family. But it can be done.

These numbers are also calculated out for someone who is not trying to pay off debt.

Are Dave Ramsey’s Budget Percentages Realistic?

As I stated above, some feel these numbers don’t make much sense in these times. Some suggest another budgeting percentage concept.

50/30/20 Rule


In a book called All Your Worth by Elizabeth Warren, Amelia Warren Tyagi‎, the percentages seem to be a bit more relaxed.

  • 50% Needs
  • 30% Wants
  • 20% Savings

As this does seem to feel a little bit easier to assign some number too and a lot less math, this also might give a little too much freedom to the detailed-oriented folks.

Needs

50% of your earnings should be allocated to the things you need. Similar to the four walls that Dave Ramsey speaks about. Home, food, utilities, and transportation are must-haves.

Rent or mortgage, utilities, phone service, insurance- including car, home, and health, taxes, other health-related costs, gas, basic food needs, legal obligations like student loans, anything that you have a contract to pay like cell phones, gym membership, or satellite tv and other legal obligations like child support.

Wants

30% of your earnings are assigned to wants. This is literally what you want. I was saving money for a pool that I have so badly wanted for so many years.

But it could be smaller things like a cup of coffee or a new purse. The theory is that no budget will be sustainable if you don’t add any fun.

I agree with that but I’m not sure it should be this high of a percentage. Especially if you are in debt.

Savings

20% of your earnings are saved. Unless you have debt. If there is debt then 20% of your earnings should be for debt payoff. The 20% savings rule is a good rule.

This will allow you to not only save for retirement but also save for your emergency fund and any other big purchases you want to make.

Couple adding money to a piggy bank

The 50/30/20 rule will also take into consideration debt. You can read more about All Your Worth in this post.

How to Stay Within Your Budget

The first thing is to find a system that works for you. There are other budgeting systems from every personal finance expert out there but finding one that works for you is key.

Budgets like zero-based budget, reverse budgeting method, and the very popular “no budget at all” are choices that might give a better fit. Find one that works for you (I suggest staying clear of that last one) and just start budgeting.

If you do need help with a budget, you can check out the Financial Planner and Workbook.

Then, in order to stay within your budget and make it work for you, there needs to be a high level of commitment.

It might take a few months to get into the grove and make appropriate tweaks but once you have decided that this is how things work, then there’s no turning back on your money success.

Final Thoughts on Dave Ramsey’s Recommended Percentages

It really is all about personal preference. If you like to have all the details in front of you and create spreadsheets, then the Dave Ramsey Recommended percentages will serve you well.

If that’s too much pressure, then skipit and try the 50/30/20 method.

Personal finance is personal. Dave’s bugeting percentages will give you an idea if you might be spending too much money on one area or another.

If your car payment is 40% of your take-home income, you might want to consider doing something about that.