I was reading the Wikipedia post on personal budgets and was particularly interested with the allocation guidelines section.

When we set up our current family budget we did it exactly the opposite way. We wrote down all of our expenses and then saw how much money we had left over to do things like pay off debts, save, vacation, fun money, etc.

Using some kind of percentage based template is an interesting, and probably very useful, way to plan a budget.

I went to the template generator they linked to and put in a variety of dollar amounts between between 30K and 100K annual income and noticed something troubling.

Everything is built off of predetermined percentages which can be a useful starting point but do people making 100K per year really need to spend that much more than people that make 50K? Or eat that much more, wear that much better clothes, etc?

At some level, it seems like a troubling thought to say that people should spend a certain percentage on everything. It seems like it would encourage people into increasing their expenses with every extra dollar they bring in.

I know when we get a raise, we normally try to take as much of it as possible and add it to savings/paying off debt. We are fortunate that we currently have enough money to be able to do some fluff things and feel very little need to do even more fluff things.

It is interesting to see how much these kinds of templates recommend for each bucket and would probably be more useful to people with lower incomes/higher debt simply because it poorly handles expenses that only need to grow to certain absolute amounts by letting them grow indefinitely.

They do provide the warning that the calculator is only for incomes below $130,001 which probably accounts for that.

I might have to look into creating buckets with predetermined amounts to hold the money but since my savings plan is for my own personal money as opposed to the family money the buckets will probably look very different.

I might do something like web expenses (with the max $ being the yearly costs), football tickets (with the max $ being the cost of the season ticket), saving for big items, permanent savings, fluff spending.

 

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