Dave Ramsey’s Recommended Budgeting Percentages (Updated 2021)

Budgeting Percentages-David Lawrence Ramsey III is an American radio show host, author, and businessman also, with a degree in Finance and Real Estate.

He talks about how to plan and manage your finances, making your budget. One of is teachings is on Budgeting percentages, having a financial plan that works, “Zero-based.”




This involves the process of creating a plan on how to spend your money. This spending plan is also known as a budget.

Budgeting is having a financial plan on how to balance your expenses with your income, and this allows you to plan for the future, giving you an advance opportunity to determine if you will have enough money to do the things you desire without going into debt.


How to Budget like Dave Ramsey

Budgeting is not something hard for you to do, make sure you are disciplined and consistent about it. 

  1. Step 1 – Write down your total income, every cent that comes to you from every source including your household members that are contributing in one way or the other to your budget because of every cent matters.
  2. Step 2 – Do an inventory of all your expenses, ranging from regular bills like your mortgage rent, electricity, to those that are irregular, like your insurance. Just make sure you remember to list all of them. Break out your other expenses, like gas, subscription, groceries, shoes, and kinds of stuff. You need to account for every dollar spent.
  3. Step 3 – Apply the zero-based formula, that is, your monthly income – monthly expenses to equal zero.
  4. Step 4 – Track and monitor your spending.


The 50|20|30 budget rule

This is a budgeting method to give you a quick start guide to budgeting.  50% of your income goes towards needs, 30% towards wants, and 20% towards savings and any debt payments. This helps you in breaking down your expenses and revenue.

  • Needs – This includes housing costs, utilities, groceries, healthcare costs, and also transportation expenses.
  • Wants – Recreation, Personal spendings, Miscellaneous expenses.
  • Savings – Insurance and debt payments.


Dave Ramsey’s Budgeting Percentages

  1. Giving – Ramsey advice-giving 10% of your monthly income to worthy causes.
  2. Saving – Saving 10% of your income for retirement plans, which ideally is within a 401(K) or IRA.
  3. Food –  10-15% is allocated for grocery shopping, and when you out.
  4. Utilities – 5-10% is to cover the  Cellphone, internet, cable, gas, and electricity expenses.
  5. Housing Costs –  25% is allocated for the Rent or mortgage payments, alongside property tax, home or renters insurance, home maintenance, HOA fees, and PMI.
  6. Transportation –  10% for all transportation costs, including public transportation, car insurance, oil changes, car payment, and parking tickets.
  7. Health –  5- 10% goes to all the medical and health care bills (not including health insurance premiums)doctor visits, prescriptions, and dental care.
  8. Insurance –  there should be 10- 25% is budget for insurances, which includes: Health, life, and disability insurance. However, auto insurance and home insurance are placed within the transportation and housing categories.
  9. Recreation –   5- 10% goes towards what Ramsey thought of has “your fun money”  any lifestyle expenses, such as gym memberships or kids’ activities, as well as entertainment expenses like Netflix,  concert tickets, and travels.
  10. Personal Spending –  5- 10% for your care, toiletries, amazon purchases, shoes, clothes, home decoration, and furnishings.
  11. Miscellaneous – there is a 5 – 10% recommendation on the things you forget to budget for, and they fall into this category.


How You can Track and Monitor Your Spending.

It a reasonable idea for you to monitor your spending and it pretty easy to do.

  1. Keep a pen and paper, funny write? But you will need it to keep records.
  2. Record every expense and money that comes to you every day.
  3. Have a budget, we have explained how you can do that earlier. You need to have a planned budget for the month so that you won’t run overboard or worst end in debt by spending the money you don’t have.
  4. Be prudent in your spending. We can’t overemphasize this. Avoid any frivolous spending, and before you know this, you are on your way to financial freedom.


How Visible is Dave Ramsey’s Budgeting Percentage plan

Dave Ramsey says that these budget percentages are just guidelines for starting. Since financial situations differ, you may need to make some adjustments to some categories, to make it suitable for your needs. 

Also, in his budgeting breakdown, he did not give allowance for debt, which may make it difficult for those in debt.

It is evident that this budgeting percentage plan will not always work or not even work at all for some households. Some did not even believe in the prospect of giving because of it a personal decision.  

Also, it is not everyone that will ensure that much percentage in their insurance policies nor spend that much on Recreation. This only means one the % allocated to these areas were reduced, it will be added to other much-needed areas of the household.

But if you are starting on how to plan your finances, this is a good template for you to work with or pattern after.


Dave Ramsey’s Formula on How to be Debt-free

For some people being debt-free is a myth that can not be realized with them because of how much they are owing and how little they are earning. So being debt free becomes a far fetched idea for them. 

But Dave Ramsey has an answer for this. He explains this in his “every dollar” budget, which is ” Zero-based.” Monthly income – monthly expenses = Zero.

He advises that if you stop wasting your money and cut back on eating out, utilities, clothing, and some other stuff you overspend on, you will get back to zero quickly. That means no more debt recorded.




With these Dave Ramsey’s recommendation on budgeting percentages, be ready to take on your journey to financial freedom?  Follow the stated steps.

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