Everyone can put their finances in order. It’s just a matter of taking control over expenses and your income, and adding a winning attitude. With a basic budget you can easily do this, since you will be able to allocate your expenses to a well-defined item list and you will know what percentage of your income to assign to cover them. A proposal to do so are the following categories:

Housing

For most of us, living expenses are the biggest ones. Most experts advise allocating up to a third of your salary in this concept, others will say up to 35%, but our recommendation is that you live simply and make an effort to use your money for productive purposes, therefore in Dear Money we give a 25% of our salary. This isn’t enough for you? Ask for a raise, get a roommate or two...you’ll see that you’ll be grateful in the future. 

Services

This is complementary to the housing, so if you are following our advice, the sum already reaches 30% altogether. Dedicate 5% for complementary services of your living expenses, be it electricity, gas, water, parking fee, higiene, tips for the garbage, cable for TV, internet, etc.

Grocery Shopping

Another concept that has to do with our home, it’s already 40%!!! We know that it’s not easy to live with a tight budget when it impacts our food, but it’s not about saying goodbye to our cravings, it’s about measuring ourselves, knowing how to cut expenses that are not necessary and being able to distribute our money in the foods that are better to our body and our pockets. Goodbye to imported wine for dinner? How about the aged hamm I like so much? Maybe you'll have to cut them off the grocery list…that would be on your list of nice-to-haves and whims. Another important thing, we know it’s hard to balance between meals at home and meals at restaurants, but trust us, if you discipline yourself to spend less and eat better, you’ll begin to see positive changes to your economy.

Transportation

Ok so we are out of the house…and it’s also expensive!!! Regardless of what your means of transportation is, look for it to be more efficient in time and cheaper in cost! Any ideas? Look for a job closer to home, travel in a compact car, walk, use a bicycle, a scooter, do a carpool with your coworkers to share the cost…There are always ways to lower our expenses, we just have to organize ourselves. Remember that the way you move in your city is very important, because in this we lose time and money! Consider that in addition to gas expenses, vehicles require maintenance and they wear off…don't forget to consider all the costs!

Leisure Expenses

This is a broad concept, but the word “pleasure” sums it up perfectly, here goes everything that you want to do but ain't necessary. Consider in this item the nights out, the concerts, nights at the bar, the tango clases, the meals in restaurants and trips to the cinema. Yes, everything that you want to do but ain't a necessity…and beware, you only get 30%...so spend your “pleasures” wisely.

Savings

Do you remember our recommendation to follow the 50-30-20 rule? Well, this is when it applies that 20% of your salary should go to savings. If you manage to save 20% or more, it means you are doing really well and you have what it takes to achieve healthy financials, investments and reach economic goals. What if not? Don’t worry, take care of correcting the previous items until you manage to have a 20% or more on savings.

If you have already done the exercise of multiplying your salary to these percentages and you realized that you won’t make it, it’s time to reduce expenses and/or increase your income. It’s not about freaking out or thinking that you will never make it, take this (basic) budget as your new goal and do what is necessary to achieve it.

Tip: if your rent goes higher than 25%, you can subtract a little from your pleasures, but you must understand that you live in a more expensive place that you can afford, although it’s your pleasure. Just like this, the percentages may vary a bit, but don’t fool yourself by saying “I don’t need to save” or “I don’t need a health insurance”, because as you get older you’ll realize that, just like going out for fun, they are concepts worth putting your money on.

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