Dave Ramsey Recommended Household Budget Percentages

Breaking down the Dave Ramsey Budget Percentages

Dave Ramsey is known online as a personal finance guru whose unparalleled budgeting tips can get anybody’s finances into a better place. His guidelines work well because they are clear, concise, and can be followed by pretty much anyone.

One of his most well-known financial tips comes in the form of his recommended household budget percentages that serve as a clear outline for families to follow to keep their budget in check.

The concept is simple- you set aside a certain percentage of your income (after tax) to every expense category.

This is extremely helpful since you are giving yourself a wake-up call if your spending habits for a certain category go well beyond what is necessary.

In this post we are going to talk about:

  • Budget categories you need to attribute your income towards.
  • Dave Ramsey’s recommended budget percentages
  • How you can change these percentages to work well for your own financial situation (if needed).

Some of the links below are affiliate links. You can read my full disclosure here.

First off to get you started, you can use this free budget planner here:

Budget Percentage Categories

Dave has created some of the most common and well-known categories and made a list out of them. 

Here is the list of categories you are going to need to budget for according to his system:

  • Saving— 10%
  • Food— 10% to 15%
  • Utilities— 5% to 10%
  • Giving— 10%
  • Housing Costs— 25%
  • Transportation—- 10%
  • Personal Spending— 5% to 10%
  • Healthcare— 5% to 10%
  • Recreation— 5% to 10%
  • Insurance— 10% to 25%
  • Misc Expenses— 5% to 10%

Dave Ramsey Budget Percentage Pie Chart

If you are a little more visual with the way you like things, here is a handy pie chart I created. Feel free to download it:


Budget Categories Explanation

Now that we know what the recommended budget percentages are let us get into what the categories mean and what they should ideally include:


Saving at least 10% of your income for the future you is a pretty simple one to understand. The most common savings account you should send your money towards would be an IRA or a 401(k)

You could also include investments in this category which would include things like investing in index funds, dividend investing, value or growth stock investing, etc.

However, I would suggest having a completely separate category for your investments to keep you more on track. This would mean you could have 5% of your income dedicated to investing instead of simply saving (putting it into a 401(k)).

There is a difference between saving (putting aside money bit by bit to see small returns in the long run) and investing (trying to grow your money with conscious and daily efforts with the risk involved).

I would suggest putting some energy, time, and money into both.


Food budgeting will include any money you spend on takeouts, groceries or going to a restaurant- everything is included.

This can be a hard category to keep a tab on for most people since it is pretty easy to add a bar of chocolate or two into your grocery basket when you go to the supermarket. This adds up sooner or later.

The budget percentage can help with this because you know when you are coming close to the end of your budget making it easier for you to keep yourself on track.


No matter what your financial situation is like, someone else’s is probably worse which is why Dave recommends giving 10% to your local charity or church. This really changes your money mindset as well helping you understand that a lot you spend on is unnecessary.


Utilities include electricity, water, gas, etc. I also include cable, internet and phone bills in my utilities category personally and I suggest you do too.

If you want to try a few of my savings tips to help you lower your spending, hop on over to this post that includes some of the best ways to save


Rent, mortgage, renovation, buying a new couch for the living room,…. all of it needs to fit into the 25% you set aside for housing expenses. 

More than 25% of your income is spent on housing can really affect your financial well-being. If you need to size down or spend less– keep yourself on track so that you have money for the more important stuff.

Here are some ways to decorate your house on a budget or using DIY ideas.


This includes any money you spend on car insurance, monthly car payments, Ubers, Lyfts, gas, parking tickets, car maintenance, etc.

If you are lucky enough to live in a city that offers the opportunity to take the bus, train, subway, or even walk- take that opportunity. It will save you tons by the time the month comes to an end.

Personal Spending

Personal spending is the Sunday of your budgeting categories. This one is for you and your happiness. Spend it on clothes, make-up, haircuts, a new pair of shoes,… whatever your heart desires.


Health insurance, doctor fees, the dentist all goes into this category. You cannot budget for healthcare and you cannot count pennies when it comes to this category because you and your family’s health is the most important but you still need to account for it.


This one is for fun or anything you do that is not a necessity really. It could mean gym fees, your monthly Hulu account, childcare, going to Disneyland, or pretty much anything else that you do in your free time that needs money spent.


Life insurance could be included in this category since health and car insurance are already covered. To get your insurance costs down, you could consider using Gabi which is a service that gets you the best quotes for your home or car insurance.

Misc Expenses

Anything else that cannot be placed into the above categories and that may be unique to your own situation would be included in this category.

Sample Dave Ramsey Household Budget Percentages

Now that we have understood the categories and the percentages that go along with them, a great example would be a great way to get you started.

This sample budget should be a good indication of what your household budget should look like:

Let us consider an annual average income of $77,385 which is the average household income in Massachusetts.

The Dave Ramsey Budget Percentages are for what is left of your income after tax which is why we will deduct 25.6% of the $77,385 which is $19,841.

I got this exact number by using this tax calculator. So, now we are going to have a net income of $57,544.

Using this as our base, this is what the household percentages would look like:


This is the average budget you should be going by (for example) but as you can see some of the percentages may be unrealistic for your situation. 

Dave Ramsey’s budget percentages act as a great foundation but you may have to alter some of the percentages to suit your income and situation.

For example, if you have a large family and need to spend more than $1200 a month on housing, you could lower the budget percentage for a category like personal spending, giving, or transport.

How do I determine my household percentages?

You can very easily determine your own percentages using the calculator on your phone which is basically what I do.

Track your spending for a month or so before you do this to give yourself realistic expectations. Calculate the current percentage of your income you are spending for each category so you know which ones are going to need a little extra and which ones can do with less.

This way you can alter the percentages you need to.

For example, if you have a monthly income of $4000 you may need to spend more on housing than what would be ideal. Taking away from other categories could help you do that.

The monthly percentages use the zero-based budget system which is attributing a job to every dollar even if that job is saving or debt payments.

This would mean that when you are making your only monthly budget percentages your total expenses will come to 100% since you are counting savings.

When you are using a calculator to determine what your percentages should be, simply multiple the percentage by your total income. 

So, for housing 25% x $5000 (monthly income)= $1250

Just repeat the process for every category and you have got yourself a budget. Make sure you track your expenses for a month first so that you alter any percentages if necessary.

You can download my free Dave Ramsey budget percentage worksheet at the end of this post!

What about my monthly debt payments?


Most Americans have some form of debt to payoff and you may have noticed that this category is missing from Dave Ramsey’s household percentage list.

This is because the budget percentages are geared towards living a debt-free life which is why if you are still on your way there, you may have to alter percentages to suit your own situation.

Dave Ramsey is all about paying off debt as fast as possible so you should be putting as much of your income toward debt payments as you can. This would mean cutting corners when it comes to categories like personal expenses, misc expenses, recreation, or food. Less takeout maybe?

These are some of my favorite debt payoff tips to get you started.

Another suggestion Dave makes all the time is to get a side hustle or side job to boost your income and help pay off debt. Here are some ideas you should consider.

Everything from starting a blog to becoming a freelancer can be considered.

Budgeting Method Options:

While the Dave Ramsey budget percentage method is great and works for tons of people, you could consider exploring other budgeting methods if this is not your cup of tea. 

Some of the most common ones include:

  • 50-20-30 Method
  • Reverse Budgeting
  • The 60% Solution
  • Value-Based Budget

50-30-20 Method

The 50-30-20 method was popularized by Elizabeth Warren and Amelia Tyagi before becoming one of the most popular budgeting methods out there.

The method works by giving percentages to 3 main categories of expenses. 50% of your total income (after tax) goes towards needs, 20% goes towards savings and 30% goes towards wants. 

I consider this method a simplified version of Dave Ramsey’s budget percentages since it gives you more wiggle room.

Dollar Sprout has some awesome financial calculators that are 100% free if you want some help with this. Their 50/30/20 calculator can give you the exact breakdown of your budget into three categories.

Reverse Budgeting

Reverse budgeting works on the idea that you ‘pay yourself first’ which means that you save first and spend what is left.

This means that you set a particular goal for your savings or debt payoff and put that money towards that goal before you begin spending on anything else. This could be $500 towards debt payments, for example.

Reverse Budgeting is pretty simple. You are literally reversing the process.

Most people calculate their monthly expenses and minus it from their net income. When you follow the reverse budgeting system, you are doing the opposite. You begin your budgeting by setting aside a certain amount for your savings instead of your expenses.

The second step with reverse budgeting is to pay all of your necessary expenses off such as rent, mortgage, the electric bill, phone bills, etc.

Finally, with the money that you have left after you put a certain percentage of your take-home pay towards savings, investment, or debt and paid off all of your necessary bills, you can do with it as you please.

This money that you have left after saving and paying off the necessities is yours to use and can be spent as a child would spend an allowance.

Reverse budgeting prioritizes saving for the future and paying off debts before anything else. The idea behind the budgeting method is to aim for a debt-free life no matter the cost while also keeping the path there simple.

The 60% Solution

This method was first mentioned by then editor-in-chief of MSN Money, Richard Jenkins.

This is one of the easiest budgeting systems you could go for. Using this system, you set aside 60% of your income for ALL expenses.

Unlike the 50-20-30 method, this does include just the needs. It includes federal, state, and Social taxes, phone bills, rent, clothing, insurance, cable, Netflix, and more. Anything that is classified as an expense will go in this 60% chunk.

The rest of your income should be put into these four categories with each category getting 10%:

  • Retirement (Retirement fund, pension, IRA, etc.)
  • Long-term savings (Emergency fund for a rainy day)
  • Short-term savings (This money would normally be used for holidays, new home appliances, irregular expenses, etc. You would normally use these savings within the financial year itself on a couple of unforeseen expenses)
  • Fun Money (Going out, movies, bowling, etc.)

This method draws a clear line between savings and expenses so that you can look toward the future while budgeting.

Value-based budget

This method is focused on what you deem as an important expense and works best for people who are already in a financially comfortable position.

The method asks people to write down expenses that they value which could be anything from travel to clothes.

This budget is actually more wants-driven as compared to all the others.

If there is something on your list that is of value to you, you would spend your money on it with no guilty feelings.

So if travel is what you value- your money could be spent on a flight to Bali but would have to be saved when it comes to things you do not value such as clothes for instance.

This budget revolves around the idea that you should enjoy your spending more.

While this budget does help users keep track of spending, its emphasis lies on enjoying life to the fullest while also being financially responsible. 

Best Budgeting Apps


Now that you know what sort of budget you want to follow and how to get there, it is important that you have the necessary resources.

Here are a couple of options you should consider:

1. Personal Capital

Personal Capital is my personal favorite when it comes to budgeting apps. It is super easy to use and helps you determine your budget percentages.

Personal Capital gives you an understanding of where you are spending your money. A couple of reasons I like this app:

  • It gives you an awesome visual look at your finances
  • The app is geared towards people who want to make investments but do not have tons of cash. You can easily maintain an investment portfolio.
  • Tracking your budget is really simple
  • Retirement planning
  • You can also check your net worth, investable cash, portfolio balance and more.

I have used both Personal Capital and Mint (talked about this one below) in the past but I prefer Personal Capital since it has the added feature of retirement fund tracking. You can keep track of investments, net worth, and retirement funds which means this app goes beyond the basic and present and looks towards the future.

2. Mint

Mint is a pretty and easy-to-understand app that allows you to track spending, get a bird’s eye view of your budget, get bill pay reminders and manage your finances better.

The app is free but also has paid versions with extra features.

3. Download a budget planner

You can download my free budget planner printable here that gives you a monthly look at your expenses and income so you can keep track of your finances with ease.

4. Excel Sheets

If you want to start from scratch and customize your budget planner yourself, you could always just use a simple excel sheet and put in the right columns to give yourself a basic budgeting system.

In summation: Use budget percentages wisely

Everything in this post is what I consider really useful information for anybody who wants to create a dependable monthly budget.

These percentages are a great outline for you to budget your expenses and keep track of your finances but remember that real life is not always as easy as math.

Your categories may need to be altered a bit and that is okay. Everyone’s situation and priorities are different. Housing may be more expensive than 25%, you may not have childcare to pay off, you may have debt coming in by the truckload, etc.

While you may change things around a bit, it is important that you keep track of your expenses and have a system in place.

A downloadable Dave Ramsey Budget Percentages Printable

Here is a free Dave Ramsey Household Budget Percentage template I created that you can use to get started:

Click here to get the free printable of my Dave Ramsey Budget Percentages

It includes the recommended percentages and an easy-to-fill-in table for you to keep track of your expenses. You can use it to create your own household budget with the help of a simple print button.


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