Steps To The Right Budget

Setting a goal can be so difficult to do and maintain. The right lane to wealth, must always include budgeting. Start by determining...

your net spendable income (NSI). This is what you have to spend after giving and taxes.

1. Calculate all sources of known income for the year: salary, bonuses, investment income, Social Security, and so on to determine your total income for the year.

2. Determine the percentage of your gross income that you intend to give during the year. My recommendation is to use 10 percent or a tithe to honor God first. I believe that Christians should have reason to be far more generous than the non-believer.

3. Calculate the amount you'll likely owe the federal government in taxes. You can determine this amount from prior year income tax returns.

4. Subtract these two numbers from your gross income, you'll have your NSI. This is the amount you should allocate to cover your monthly or annual expenses. Tiered Allocations The next step is to allocate money for the largest sources of expenses to the lowest, so let's begin with housing.

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Housing: Your total housing expense should be no greater than 30 percent of your net spendable income. If your NSI is $45,500 that would equal $13,650 for rent or mortgage, as well as insurance, maintenance and utilities. According to the Consumer Expenditure Survey, 32.8 percent of post-tax income in 2012 went to housing. Clearly, our livable budget amount is much less. This is the number one area where most people make a mistake. They buy or rent more housing than they can comfortably afford. It's better to ''down-size'' than to be "house-poor."
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Autos and Transportation: Allocate how much you'll spend on your auto or transportation costs. We recommend no more than 11 percent of your NSI. Again, we recommend that you should be more conservative. Driving a car that's paid in full will greatly reduce your transportation expenses.
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Food: Food is the next largest category that should be carefully accounted for in your budget. This includes groceries and dining out. We recommend a total of 11 percent of your NSI.
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Healthcare:

The next biggest category is likely to be healthcare. The average American spent 6.9 percent of their income in 2012 on health- related costs such as insurance and medical bills. By combining insurance and out-of-

pocket costs for medical and dental visits, we recommend this category be allocated as 9 percent of your NSI.
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Miscellaneous:

This completes most of the big items in your budget. However, there are many other categories to include, such as expenses for mobile phones and Internet services as well as the costs associated with pet ownership etc.
Include categories for savings and investing. If you're carrying debt from student loans, car payments or credit cards, add a category in your budget for eliminating all consumer debt by paying these down each month.
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